SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
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Act of 1934
(Amendment No.)
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Swank, Inc.
(Name of Registrant as Specified in Its Charter)
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if other than the Registrant)
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SWANK, INC. 6 Hazel Street, Attleboro, Massachusetts 02703
Notice of Annual Meeting of Stockholders
The 1998 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 23, 1998 at 11:00 o'clock A.M.
local time, for the purpose of considering and acting upon the
following:
1. The election of two (2) Class III directors to serve on the
Company's Board of Directors;
2. The approval of the appointment of Coopers & Lybrand L.L.P.
as the independent accountants of the Company for the year
1998;
3. The approval of the Company's 1998 Equity Incentive
Compensation Plan; and
4. 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 26, 1998 will be entitled to notice of, and to vote at,
the meeting or any adjournment thereof.
By Order of the Board of Directors
Christopher F. Wolf,
Secretary
Dated: March 23 , 1998
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.
SWANK, INC. 6 Hazel Street, Attleboro, Massachusetts 02703
PROXY STATEMENT
1998 Annual Meeting of Stockholders
April 23, 1998
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
1998 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 26, 1998, the record date for the
determination of stockholders entitled to notice of and to vote at
the Meeting, consisted of 16,514,523 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. The affirmative vote of a plurality of
votes cast at the Annual Meeting is required to elect directors.
The affirmative vote of a majority of shares of Common Stock
present, in person or by proxy, and entitled to vote at the Annual
Meeting will be required to ratify the appointment of Coopers &
Lybrand L.L.P. as the Company's independent auditors for the year
ending December 31, 1998. The affirmative vote of a majority of
the shares of Common Stock present, in person or by proxy, and
entitled to vote at the Annual Meeting will be required to approve
the 1998 Equity Incentive Compensation Plan. This Proxy Statement
and the accompanying form of proxy will be mailed or otherwise
furnished on or about March 23, 1998 to all stockholders of record
at the close of business on February 26, 1998.
OWNERSHIP OF VOTING SECURITIES
The following table sets forth information as of February 26,
1998 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 ("the Exchange Act")) who is known to the
Company to be the beneficial owner of more than 5% of the Common
Stock:
Title of Class Name and Amount and
Address of Nature of Percent of
Beneficial Beneficial Class
Owner Ownership
Common Stock The New Swank, Inc. 10,046,402 (1)(2) 60.8%
Retirement Plan
90 Park Avenue
New York, NY 10016
Common Stock Marshall Tulin 3,896,135 (3)(4) 23.5%
90 Park Avenue
New York, NY 10016
Common Stock John Tulin 3,465,089 (3)(5) 20.9%
90 Park Avenue
New York, NY 10016
Common Stock Raymond Vise 3,226,435 (3)(6) 19.5%
8 El Paseo
Irvine, CA 92715
(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) 6,846,373 shares
of Common Stock allocated to participants' ESOP 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, and
(b) an additional 324 of such shares allocated to the accounts of
former employees, subject to forfeiture, and able to be voted by
the trustees on all matters on which stockholders may vote.
(2) This amount also includes 2,607,741 shares of Common Stock
allocated to participants' ESOP accounts in the Retirement Plan as
to which participants 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 such
ESOP accounts as to which no voting instructions are received are
required to be voted in the same proportion as shares allocated to
ESOP accounts as to which voting instructions are received. This
amount also includes 591,964 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,
Chairman of the Board and a director of the Company, John A. Tulin,
President and a director of the Company and Raymond Vise, a
director of the Company. This amount includes (a) 324 shares of
Common Stock allocated to the accounts of former employees but
voted by the trustees (see footnote 1 above), (b) 2,607,741 shares
held in ESOP accounts as to which the trustees have sole voting
power (see footnote 2 above) and (c) 591,964 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. This
amount also includes 40,000 shares which Mr. Tulin has the right
to acquire within 60 days through the exercise of stock options
granted under the Company's 1987 Incentive Stock Option Plan (the
"1987 Plan") and 3,278 shares allocated to his ESOP account under
the Retirement Plan.
(5) This amount includes 3,180 shares owned by Mr. Tulin's wife and
7,000 shares held by her as custodian for a child. Mr. Tulin
disclaims beneficial ownership of these shares. This amount also
includes 40,000 shares which Mr. Tulin has the right to acquire
within 60 days through the exercise of stock options granted under
the 1987 Plan and 73,121 shares allocated to his ESOP account under
the Retirement Plan.
(6) This amount includes 20,000 shares which Mr. Vise has the
right to acquire within 60 days through the exercise of stock
options granted under the 1994 Non-Employee Director Stock Option
Plan (the "1994 Plan").
The following table sets forth information at February 26, 1998
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 (12 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.
Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
Mark Abramowitz 22,600 (1) Less than 1%
John J. Macht 15,000 (2) Less than 1%
James Tulin 106,043 (3) Less than 1%
John Tulin 3,465,089 (4) 20.9 %
Marshall Tulin 3,896,135 (5) 23.5%
Raymond Vise 3,226,435 (6) 19.5 %
Lewis Valenti 98,524 (7) Less than 1%
Eric P. Luft 68,924 (8) Less than 1%
All directors and
executive officers as a
group(12 persons) 4,823,099 (9) 28.6 %
(1) Includes 20,000 shares which Mr. Abramowitz has the
right to acquire within 60 days through the exercise of stock
options.
(2) Includes 15,000 shares which Mr. Macht has the right
to acquire within 60 days through the exercise of stock options.
(3) Includes 35,000 shares which Mr. Tulin has the right to
acquire within 60 days through the exercise of stock options
granted under the 1987 Plan, an aggregate of 428 shares held by his
children and an aggregate of 70,615 shares of Common Stock
allocated to his ESOP account and 401(k) account under the
Retirement Plan.
(4) This amount includes the shares referred to in footnotes 3 and
5 to the first table above under "Ownership of Voting Securities."
(5) This amount includes the shares referred to in footnotes 3 and
4 to the first table above under "Ownership of Voting Securities."
(6) This amount includes the shares referred to in footnote 3 and 6
to the first table above under "Ownership of Voting Securities."
(7) This amount includes 35,000 shares which Mr. Valenti has the
right to acquire within 60 days through the exercise of stock
options granted under the 1987 Plan and an aggregate of 63,524
shares of Common Stock allocated to his ESOP account and 401(k)
account under the Retirement Plan.
(8) This amount includes 15,000 shares which Mr. Luft has the right
to acquire within 60 days through the exercise of stock options
granted under the 1987 Plan and an aggregate of 53,924 shares of
Common Stock allocated to his ESOP account and 401(k) account under
the Retirement Plan.
(9) Reference is made to footnotes (1) through (8) above. This
amount also includes 351,666 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 1987 Plan and the 1994 Plan.
Section 16(a) Beneficial Ownership Reporting Compliance
Bruce Shopoff, William Rubin and Marshall Tulin each failed to
file a Statement of Changes in Beneficial Ownership on Form 4,
but reported on an Annual Statement of Changes in Beneficial
Ownership on Form 5, one transaction with regard to shares of
Common Stock.
I. Nominees for Election as Directors
The Company's By-laws divide the Board of Directors into three
classes, designated as Class I, Class II and Class III, with each
class to be as nearly equal in number as possible. At each annual
meeting of stockholders, directors are elected for a term of three
years to succeed those in the class whose terms expire at such
annual meeting.
At the Meeting, stockholders will elect two Class III directors
to serve for a term of three years, until the annual meeting of
stockholders in the year 2001 and until the election and
qualification of their respective successors. Unless otherwise
indicated thereon, all proxies received will be voted in favor of
the election of the nominees for election as directors. Should any
of the nominees not remain a candidate at the time of the 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 following sets forth certain information about each nominee
for election as a director of the Company and each director whose
term of office will continue after the Meeting, including his
principal occupation or employment.
Nominees:
Marshall Tulin (1) - Class III
Mr. Tulin, who is 80 years old, is Chairman of the Board of the
Company. He joined the Company in 1940, was elected a Vice
President in 1954, President in 1957 and Chairman of the Board on
October 24, 1995. Mr. Tulin became a director in 1956.
Raymond Vise (1)(2)(3) - Class III
Mr. Vise, who is 76 years old, served as Senior Vice President of
the Company for more than five years prior to his retirement in
1987. Mr. Vise became a director in 1963.
Directors whose terms of office will continue after the Meeting:
Mark Abramowitz (2)(3) - Class I
Mr. Abramowitz, who is 62 years old, has been a partner in the
law firm of Parker Chapin Flattau & Klimpl, LLP for more than the
past five years. The firm is general counsel to the Company. Mr.
Abramowitz became a director in 1987.
James Tulin (1) - Class I
Mr. Tulin, who is 47 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.
John Tulin (1) - Class II
Mr. Tulin, who is 51 years old, is President of the Company. He
joined the Company in 1971. He was elected a Vice President in
1974, a Senior Vice President in 1979, Executive Vice President in
1982 and President on October 24, 1995. Mr. Tulin became a
director in 1975.
John J. Macht - Class II
Mr. Macht, who is 61 years old, has been President of The Macht
Group, a marketing and retail consulting firm, since July 1992.
From April 1991 until July 1992 Mr. Macht served as Senior Vice
President of Jordan Marsh department stores, a division of
Federated Department Stores. Mr. Macht became a director in
December 1995.
(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 whom has an employment agreement with the
Company (see "Remuneration and Related Matters"), and for the
Company's Chief Financial Officer.
There were 6 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 committees of the
Board 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 Company, except that James Tulin and John Tulin are
sons of Marshall Tulin.
Remuneration and Related Matters
The following table sets forth certain summary information
concerning compensation during the fiscal year ended December 31,
1997 with respect to the Company's Chief Executive Officer and each
of the other 4 most highly compensated executive officers of the
Company:
Summary Compensation Table
ANNUAL COMPENSATION
OTHER ALL
NAME AND ANNUAL OTHER
PRINCIPAL COMPEN- COMPEN-
POSITION YEAR SALARY BONUS SATION (6) SATION (9)
Marshall Tulin (1) 1997 $360,000 $ 25,000 $14,934
Chairman of 1996 360,000 -0- 7,442
the Board 1995 360,000 -0- 462
John Tulin (2) 1997 293,333 125,000 14,234
President, Chief 1996 220,000 50,000 $36,461(7) 7,442
Executive Officer 1995 220,000 -0- 36,188(7) 462
Lewis Valenti (3) 1997 160,000 201,875 15,834
Senior Vice 1996 160,000 121,328 8,372
President 1995 125,000 194,676 2,262
Eric P. Luft (4) 1997 130,000 235,145 15,334
Senior Vice 1996 130,000 150,004 8,372
President 1995 135,000 110,352 2,262
James Tulin (5) 1997 237,272 65,000 41,802(8) 11,534
Senior Vice 1996 190,000 40,000 41,217(8) 7,442
President 1995 190,000 -0- 43,598(8) 462
(1) Mr. 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.
(2) Mr. Tulin has an employment agreement with the Company which
terminates on December 31, 1998 providing for a salary at the rate
(commencing February 1, 1997) of $300,000 per annum.
(3) The bonus amounts shown for Lewis Valenti include sales
commissions in the amounts of $161,875, $96,328 and $139,214 for
the years 1997, 1996 and 1995, respectively.
(4) The bonus amounts shown for Eric P. Luft include sales
commissions in the amounts of $175,145, $120,004 and $110,352 for
the years 1997, 1996 and 1995, respectively.
(5) Mr. Tulin has an employment agreement with the Company which
terminates on December 31, 1998 providing for a salary at the rate
(commencing February 1, 1997) of $240,000 per annum.
(6) Except as set forth for James Tulin, perquisites and other
personal benefits during 1997 did not exceed the lesser of $50,000
or 10% of reported annual salary and bonus for any of the executive
officers named in the "Summary Compensation Table".
(7) These amounts include automobile lease payments of $18,927 and
a travel allowance of $9,000 in 1996 and automobile lease payments
of $18,929 and a travel allowance of $9,450 in 1995.
(8) These amounts include automobile lease payments of $17,838 in
1997 and $17,394 in each of 1996 and 1995, and a travel allowance
of $10,800 in each of 1997 and 1996 and $14,500 in 1995.
(9) The amounts set forth for 1997, 1996 and 1995 represent
allocations under certain benefit plans of the Company as follows:
DEFERRED
RETIREMENT PLAN COMPEN-
ESOP I and ESOP II 401(k) SATION
ACCOUNTS ACCOUNTS PLAN TOTAL
1997
Marshall Tulin $3,734 $11,200 $14,934
John Tulin 3,734 10,500 14,234
Lewis Valenti 3,734 12,100 15,834
Eric P. Luft 3,734 11,600 15,334
James Tulin 3,734 7,800 11,534
1996
Marshall Tulin 7,292 $ 150 7,442
John Tulin 7,292 150 7,442
Lewis Valenti 7,322 1,050 8,372
Eric P. Luft 7,292 1,050 8,372
James Tulin 7,292 150 7,442
1995
Marshall Tulin 412 50 462
John Tulin 412 50 462
Lewis Valenti 412 50 1,800 2,262
Eric P. Luft 412 50 1,800 2,262
James Tulin 412 50 462
Each director who is not also an employee of, or counsel to, the
Company receives a fee of $2,000 per meeting of the Board and of
committees of the Board attended by him. In addition, pursuant to
the terms of the 1994 Plan, each director who is not also an
employee of the Company or any subsidiary of the Company in office
immediately following each annual meeting of stockholders at which
directors are elected will, effective on the date such annual
meeting is held, automatically be granted an option to purchase
5,000 shares of Common Stock. During the fiscal year ended
December 31, 1997, Messrs. Abramowitz, Macht and Vise were each
granted an option to purchase 5,000 shares of Common Stock at an
exercise price per share of $.78125, the fair market value per
share of Common Stock on the date of the grant.
Robert Tulin (who is the brother of Marshall Tulin and uncle of
John Tulin and James Tulin) was employed by the Company during
1997. 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 1997 amounted to $90,000.
The Company has entered into termination agreements with Messrs.
Marshall Tulin, John Tulin, Lewis Valenti, Eric P. Luft and James
Tulin which expire on December 31, 1998. 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 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, Lewis Valenti and James Tulin are
$13,116, $12,731, and $10,407, respectively.
During the Company's fiscal year ended December 31, 1997, no
stock options were granted to or exercised by any executive
officers named in the Summary Compensation Table. The following
table sets forth certain information with respect to the number and
value of unexercised options held by such executive officers as of
December 31, 1997:
1997 FISCAL YEAR END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY -End (#) FY-End ($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
Marshall Tulin 40,000 / 0 $7,500 / 0
John Tulin 40,000 / 0 7,500 / 0
Lewis Valenti 35,000 / 0 6,563 / 0
Eric P. Luft 15,000 / 0 2,813 / 0
James Tulin 35,000 / 0 6,563 / 0
Compensation Committee Interlocks and Insider Participation
The Company's Executive Compensation Committee consists of
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. John
J. Macht and Mr. Vise. Ronald Vise (who is the son of Raymond
Vise) was employed by the Company during 1997 as a commissioned
salesman. Aggregate compensation paid to Ronald Vise for services
rendered during 1997 amounted to $123,054. 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. In
addition, the Company and The Macht Group, a marketing and retail
consulting firm of which John J. Macht serves as President, are
parties to an agreement pursuant to which The Macht Group is
entitled to receive compensation based on net sales of products
under license agreements entered into between the Company and
licensors introduced to the Company by The Macht Group. Aggregate
compensation during fiscal 1997 earned by The Macht Group under
this arrangement was $79,141. In addition, The Macht Group from
time to time provides marketing consulting services to the Company
and earned compensation of $25,000 during 1997 for such 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 OF DIRECTORS AND COMPENSATION COMMITTEES
The Executive Compensation Committee of the Board of
Directors, which is comprised of two non-employee directors,
determines the compensation (other than through the grant of
stock-based compensation) of the Chief Executive Officer of the
Company, other employee members of the Board of Directors and the
Company's Chief Financial Officer. The entire Board of
Directors, with the recommendation of the Company's Chief
Executive Officer, reviews and approves the salaries and bonuses
of the Company's other executive officers. The Stock Option
Committee, which is also comprised of two non-employee directors,
administers the Company's compensation plans under which stock
and stock-based compensation may be awarded. The Incentive Share
Committee, which is also comprised of two non-employee directors,
administers the Company's Incentive Share Plan.
The main objectives of the Company's executive compensation
structure have included rewarding individuals for their respective
contributions to the Company's performance and providing
executive officers with a stake in the long-term success of the
Company (mainly through the grant of stock options). The
philosophy of the Board of Directors and each of its compensation
committees has been to utilize a combination of salary as a base
for compensation, annual bonuses as a means of short-term
incentive compensation, stock options to provide longer term
incentives and to link portions of compensation directly with the
performance of the Company's Common Stock, and contractual
protections against changes in or loss of employment in the event
of a change of control of the Company. The Board and its
compensation committees coordinate their efforts to determine
overall compensation of executive officers.
The Board of Directors, the Executive Compensation Committee
and the Stock Option Committee have determined to place
additional emphasis on motivating executive officers and
other employees by means of performance-related incentives and
short and long range performance goals. To that end, the Board
has adopted, subject to stockholder approval at the Meeting, the
Swank, Inc. 1998 Equity Incentive Compensation Plan (the
"Incentive Compensation Plan"). The Incentive Compensation Plan
replaces the 1987 Incentive Stock Option Plan (which expired by
its terms in fiscal 1997) and the Incentive Share Plan (which
also expired by its terms in fiscal 1997), and provides for the
grant, in the discretion of the Board of Directors or any
committee appointed by the Board to administer the Incentive
Compensation Plan, of stock options, stock appreciation rights,
restricted stock awards, restricted stock unit awards,
performance awards and other stock-based awards. The Board of
Directors or such committee may, in connection with each option
or award, establish one or more objective criteria (which may
include, without limitation, reference to the Company's or any of
its division's revenues, margins or profits) to determine
whether, among other things, options or awards shall vest or
otherwise become exercisable, and whether all or a portion of the
compensation under such options or awards shall become payable.
The Board and its compensation committees believe that the
Incentive Compensation Plan will provide it with greater
flexibility to both motivate executive officers and employees
and enable them to participate in the financial success of the
Company.
Base Salary. The Board of Directors and Executive
Compensation Committee review the base salary of each executive
officer annually. In determining the base salaries to be paid to
executive officers (other than those whose salaries are fixed
pursuant to the terms of applicable employment agreements), the
Board of Directors and Executive Compensation Committee consider,
among other factors, the executive's level of responsibility,
experience and expertise, length of service with the Company and
compensation levels in competing companies. The Board and the
Executive Compensation Committee, in consultation with the
Company's Chief Executive Officer, also review the performance of
each executive officer. These reviews have been qualitative in
nature, with no specific weight being assigned to the various
factors considered.
Annual Bonus Compensation. The Board and Executive
Compensation Committee continue to place emphasis on incentive
compensation. In determining the amount of annual bonuses, the
Board and the Executive Compensation Committee have considered
such factors as the Company's revenues and profitability, as well
as an individual executive's personal performance and
contribution to the Company's overall performance during that
fiscal year. No specific weight is generally assigned any
particular factor, although where the Company's overall financial
results have not been favorable, the Board and Executive
Compensation Committee have from time to time not awarded annual
bonuses or have reduced them to qualitatively reflect such
results.
Other Incentive Compensation. The Company has in the past
utilized stock options as the primary method of providing stock-
based incentive compensation. However, as described above, the
1987 Plan expired by its terms in fiscal 1997 and no further
options may be granted thereunder. As described above, the Board
of Directors and its compensation committees have determined to
replace the 1987 Plan and the Incentive Share Plan with the
Incentive Compensation Plan as the primary manner, along with
annual bonuses, of motivating its employees, of providing employees
a way of participating in the growth of the Company, as well as
of linking the interests of its executives with the overall
interests of stockholders.
Chief Executive Officer Compensation. The compensation of
John Tulin, the Company's President and Chief Executive Officer,
for fiscal 1997 was comprised of two components, salary and
annual bonus. Mr. Tulin's salary of $300,000 per annum is fixed
through the end of fiscal 1998 pursuant to an employment
agreement with the Company. However, the Executive Compensation
Committee awarded Mr. Tulin a bonus of $125,000. Based on its
review of Mr. Tulin's performance, the Executive Compensation
Committee noted, among other things, Mr. Tulin's leadership in
the substantial improvement for the second consecutive year in
the Company's operating results, including net income in fiscal
1997 of $4,847,000 ($.30 per share), the successful integration
of the businesses under three new license agreements into
existing operations, and the continuing effectiveness of programs
implemented by him to more closely monitor and control overhead
and asset management.
Executive Stock Option Committee
Compensation and Incentive
Board of Directors Committee Share Committee
Mark Abramowitz Mark Abramowitz John J. Macht
John J. Macht Raymond Vise Raymond Vise
James Tulin
John A. Tulin
Marshall Tulin
Raymond Vise
PERFORMANCE GRAPH
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
FISCAL YEAR ENDING
1992 1993 1994 1995 1996 1997
SWANK, INC. 100 118.75 106.25 75.00 59.38 112.50
PEER GROUP 100 121.12 76.92 44.01 43.65 82.74
BROAD MARKET 100 119.95 125.94 163.35 202.99 248.30
ASSUMES $100 INVESTED ON JANUARY 1, 1993 AND THAT ALL DIVIDENDS
WERE REINVESTED
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., Salant
Corp. and Tandy Brands Accessories, Inc., the latter replaces
Comforce Corp. which exited the fashion jewelry business during
1996.
Note: The stock price performance shown on the graph above is not
necessarily indicative of future price performance.
II. 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, 1998. 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.
III. Approval of the 1998 Equity Incentive Compensation Plan
The Board of Directors has adopted, and at the Meeting
stockholders of the Company will be asked to approve, the Swank,
Inc. 1998 Equity Incentive Compensation Plan . The Company's
1987 Incentive Stock Option Plan and its Incentive Share Plan
each expired by its terms in 1997 and, therefore, stock options
and incentive share awards and benefits may no longer be granted
thereunder. The Board of Directors believes that it is advisable
to have available shares for the grant of stock options and to
have a plan in place that provides the Board the flexibility,
among other things, to motivate employees and to permit them
to participate in the financial success of the Company. To that
end, the Incentive Compensation Plan adopted by the Board permits
the grant of stock options, stock appreciation rights ("SARs"),
restricted stock, restricted stock units ("RSUs"), performance
awards and other stock-based awards (collectively, "Awards").
The following is a summary of certain material features of
the Incentive Compensation Plan. The summary does not purport to
be complete and is qualified in its entirety by reference to the
terms of the Incentive Compensation Plan set forth as Exhibit A
to this Proxy Statement.
Purposes
The Incentive Compensation Plan is designed to promote the
interests of the Company and its stockholders by (i) attracting
and retaining officers and other key employees of the Company and
its subsidiaries, (ii) motivating such individuals by means of
performance-related incentives to achieve longer-range
performance goals and (iii) enabling such individuals to
participate in the long-term growth and financial success of the
Company.
Stock Subject to Incentive Compensation Plan
The maximum number of shares of Common Stock with respect to
which Awards may be granted is 3,000,000 shares of Common Stock.
The closing sales price per share of Common Stock on March 6,
1998 on the Nasdaq Stock Market was $1.25.
Administration/Eligible Participants
The Incentive Compensation Plan will be administered by the
Board of Directors or a committee of the Board designated by the
Board to administer the Incentive Compensation Plan (the
"Incentive Plan Committee"). During the 10-year term of the
Incentive Compensation Plan, the Incentive Plan Committee will
have the sole and complete authority, subject to the terms of the
Incentive Compensation Plan, among other things, to determine
when and to whom to make grants of Awards, the types of Awards to
be granted to participants, the number of shares to be covered
by, or with respect to which payments, rights or other matters
are to be calculated in connection with, Awards, and the terms
and conditions of any Award; to prescribe, amend and rescind
rules and regulations relating to the Incentive Compensation
Plan; and to make all other determinations and take all other
actions that the Incentive Plan Committee considers necessary or
desirable for the administration of the Incentive Compensation
Plan.
All key employees of the Company or any of its subsidiaries
are eligible to be designated a participant under the Incentive
Compensation Plan (each a "Participant"). As of March 6, 1998,
approximately 50 persons were eligible to be Participants.
Stock Options
Stock options granted under the Incentive Compensation Plan
may be non-qualified options or options intended to qualify as
incentive stock options within the meaning of section 422 of the
Code. Options granted under the Incentive Compensation Plan
shall be subject to such terms, including the exercise price and
conditions and timing of exercise, as may be determined by the
Incentive Plan Committee and specified in the applicable Award
agreement or thereafter; provided, however, that the terms and
conditions of grants of stock options intended to qualify as
incentive stock options will be subject to terms and conditions
that comply with such rules as may be prescribed by section 422
of the Code. Payment upon the exercise of a stock option may be
made in cash, by certified check, by exchanging shares of Common
Stock owned by the Participant (which are not the subject of any
pledge or other security interest and which have been owned by
such Participant for at least six months), or by a combination of
the foregoing.
Stock Appreciation Rights
The Incentive Plan Committee may grant SARs either alone
("unrelated SARs") or in connection with all or part of a stock
option. Upon the exercise of a SAR, a holder generally is
entitled, without payment to the Company, to receive cash, shares
of Common Stock, or a combination thereof, as determined by the
Incentive Plan Committee, in an amount equal to the excess of the
fair market value of a share of Common Stock on the exercise date
over (i) the option exercise price of the related option (in the
case of a SAR granted in connection with a stock option) or (ii)
the appreciation base of the SAR (in the case of an unrelated
SAR), multiplied, in each case, by the number of shares of Common
Stock in respect of which the SAR is exercised.
Restricted Stock and Restricted Stock Units
The Incentive Plan Committee may grant awards of restricted
stock or RSUs. Awards of restricted stock will consist of shares
of Common Stock. RSUs will consist of units with a value equal
to the fair market value of a share of Common Stock and may be
paid in cash, shares of Common Stock, or other securities or
property, all in the discretion of the Incentive Plan Committee.
Vesting of awards of restricted stock and RSUs may be
conditioned upon the completion of a specified period of service,
the attainment of specified performance goals, or such other
factors as the Incentive Plan Committee may determine. During
the restricted period, the Participant may not assign, transfer
or otherwise encumber or dispose of the restricted stock or RSUs,
except as permitted in the applicable Award agreement with regard
to shares of restricted stock. The Incentive Plan Committee has
the authority to determine, among other things, the duration of
the period during which, and the conditions, if any, under which,
the restricted stock or RSUs may be forfeited to the Company and
the other terms and conditions of such Awards.
Performance Awards
Performance awards will be earned to the extent, among other
things, performance goals set by the Incentive Plan Committee are
achieved over a performance period specified by the Incentive
Plan Committee. A performance award will consist of a right
which is denominated in cash or shares of Common Stock, will be
valued in accordance with the achievement of such goals or such
periods, and will be payable at such time, in such form and upon
such other terms and conditions, as the Incentive Plan Committee
shall determine.
Other Stock-Based Awards
The Incentive Plan Committee may grant other stock-based
Awards, which are any Awards other than stock options, SARs,
restricted stock, RSUs and performance awards, and that are
denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, shares of
Common Stock. The Incentive Plan Committee has the discretion to
determine the terms and conditions of other stock-based awards,
including the price, if any, at which securities may be purchased
thereunder.
Adjustments
In the event the Incentive Plan Committee determines that,
among other things, any dividend or other distribution,
recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, or other similar
corporate transaction or event affects shares of Common Stock
such that an adjustment is determined by the Incentive Plan
Committee in its discretion to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits
intended to be made available under the Incentive Compensation
Plan, then the Incentive Plan Committee may, in such manner as it
may deem equitable, adjust any or all of (i) the number of shares
of Common Stock or other securities of the Company (or number and
kind of other securities or property) with respect to which
Awards may be granted, (ii) the number of shares of Common Stock
or other securities of the Company (or number and kind of other
securities or property) subject to outstanding Awards, and (iii)
the exercise price with respect to any Award or, if deemed
appropriate, make provision for a cash payment to the holder of
an outstanding Award in consideration for the cancellation of
such Award.
Substitute Awards
Awards may be made under the Incentive Compensation Plan in
substitution for outstanding Awards previously granted by the
Company or its affiliates or Awards previously granted by a
company acquired by the Company or with which the Company
combines. The number of shares underlying any such substitute
Awards shall be counted against the aggregate number of Shares
which are available for grant under Awards made under the
Incentive Compensation Plan.
Transferability
Each Award, and each right under any Award, shall be
exercisable only by the Participant during the Participant's
lifetime, or, if permissible under applicable law, by the
Participant's guardian or legal representative.
Except as otherwise provided in an applicable Award
agreement, no Award may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a
Participant otherwise than by will or by the laws of descent and
distribution and any such purported assignment, alienation,
pledge, attachment, sale, transfer or encumbrance shall be void
and unenforceable against the Company or any affiliate; provided,
however, that the designation of a beneficiary shall not
constitute an assignment, pledge, attachment, sale, transfer or
encumbrance.
Change of Control
In the event of a Change of Control (as defined in the
Incentive Compensation Plan), any outstanding Awards then held by
Participants which are unexercisable or otherwise are not yet
vested shall automatically be deemed exercisable or otherwise
vested, as the case may be, as of immediately prior to such
Change of Control.
Amendments to the Incentive Compensation Plan
The Board of Directors may amend, alter, suspend,
discontinue, or terminate the Incentive Compensation Plan or any
portion thereof at any time; provided, however, that any such
amendment, alteration, suspension, discontinuance or termination
that would impair the rights of any holder or beneficiary of an
award theretofore granted shall not to that extent be effective
without the consent of the affected Participant.
New Incentive Compensation Plan Benefits
Awards made under the Incentive Compensation Plan are
determined by the Incentive Plan Committee in its sole discretion
as described above. Accordingly, individual awards are not yet
determinable. To date, no Awards have been made under the
Incentive Compensation Plan.
Federal Income Tax Consequences Relating to Awards
The following is a summary of the principal federal income
tax consequences of Awards that may be granted under the
Incentive Compensation Plan. The summary is not intended to be
exhaustive; it does not purport to cover all of the special rules
relating thereto, including special rules relating to holders of
options subject to Section 16(b) of the Exchange Act, the
exercise of stock options with previously-acquired shares of
Common Stock, or the state, local or foreign income or other tax
consequences or considerations in connection with Awards.
Participants are urged to consult their own tax advisors with
respect to the consequences of their participation in the
Incentive Compensation Plan.
Stock Options and SARs
A Participant will not recognize taxable income for federal
income tax purposes upon the grant of a non-qualified stock
option, an incentive stock option or a SAR.
Upon the exercise of a non-qualified stock option, or a SAR
where the Participant shall receive shares of Common Stock upon
exercise, the Participant will recognize ordinary income in an
amount equal to the excess, if any, of the aggregate fair market
value of the shares of Common Stock acquired on the date of
exercise over the aggregate exercise price of the non-qualified
stock option or the aggregate base price of the SAR, as the case
may be. The Participant's basis in the shares of Common Stock
acquired is equal to the amount, if any, paid upon exercise,
increased by the amount of ordinary income required to be
recognized, and the Company is generally entitled to a tax
deduction for such amount at that time. If a Participant later
sells shares of Common Stock acquired pursuant to the exercise of
a non-qualified stock option, he or she will recognize long-term
or short-term capital gain or loss, depending on the period for
which the shares of Common Stock were held. Long-term capital
gain is generally subject to more favorable tax treatment than
ordinary income or short-term capital gain.
In the event that cash or other property is received upon
the exercise of a SAR, the amount of such cash or the fair market
value of such property will be ordinary income to the Participant
and the Company will generally be allowed a tax deduction for
such amount. The Participant's basis in such property will be
equal to its fair market value.
Upon the exercise of an incentive stock option, a
Participant will not recognize ordinary income. If a Participant
disposes of the shares acquired pursuant to the exercise of an
incentive stock option more than two years after the date of
grant and more than one year after the transfer of the shares to
the Participant, the optionee will recognize long-term capital
gain or loss and the Company will not be entitled to a tax
deduction. However, if a Participant disposes of such shares
prior to the end of the requisite holding periods (a
"disqualifying disposition"), all or a portion of the gain will
be treated as ordinary income and the Company will generally be
entitled to deduct such amount.
In addition to the federal income tax consequences described
above, a Participant may be subject to the alternative minimum
tax, which is payable to the extent it exceeds the Participant's
regular tax. For this purpose, upon the exercise of an
incentive stock option, the excess of the fair market value of
the shares of Common Stock over the exercise price therefor is an
adjustment which increases alternative minimum taxable income.
In addition, the Participant's basis in such shares is increased
by such excess for purposes of computing the gain or loss on the
disposition of the shares for alternative minimum tax purposes.
If a Participant is required to pay an alternative minimum tax,
the amount of such tax which is attributable to deferral
preferences (including the incentive stock option adjustment) is
allowed as a credit against the Participant's regular tax
liability in subsequent years. To the extent the credit is not
used, it is carried forward.
Restricted Stock
Generally, the grant of restricted stock will not result in
taxable income to the Participant or a deduction for the Company
in the year of grant if the restricted stock is subject to a
substantial risk of forfeiture and is nontransferable within the
meaning of section 83 of the Code. In such case, the value of
such restricted stock will be taxable to a Participant when such
risk lapses or the restricted stock becomes transferable.
Alternatively, a Participant may elect to treat as income the
fair market value of the restricted stock on the date of grant by
making an election under section 83(b) of the Code within 30 days
after the date of such grant. The Company will generally be
entitled to a tax deduction equal to the amount of ordinary
income recognized by a Participant in the year such income is
recognized. The grant of restricted stock that is not subject to
a substantial risk of forfeiture or is transferable will be
taxable to a Participant at the time of grant.
Other Awards
Generally, when a Participant receives payment with respect
to RSUs, performance awards or other Awards granted to the
Participant under the Incentive Compensation Plan, the amount of
cash and the fair market value of the shares of Common Stock, or
other securities or property received, net of any amount paid by
the Participant, will be ordinary income to such Participant and
will generally be allowed as a tax deduction to the Company.
MISCELLANEOUS
In order to be included in the proxy materials for the 1999
Annual Meeting of Stockholders of the Company, stockholder
proposals must be received by the Company on or before November 24,
1998.
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 the approval
of the appointment of Coopers & Lybrand L.L.P. as the independent
accountants of the Company and FOR approval of the Incentive
Compensation Plan.
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 entitled to vote and cast with respect to
that matter. Shares subject to broker non-votes with respect to
any matter will not be considered entitled to vote 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
Christopher F. Wolf
Secretary
March 23,1998
EXHIBIT A
SWANK, INC.
1998 EQUITY INCENTIVE COMPENSATION PLAN
SECTION 1. Purpose. The purposes of this Swank, Inc.
1998 Equity Incentive Compensation Plan (the "Plan") are to
promote the interests of Swank, Inc.(the "Company") and its
stockholders by (i) attracting and retaining officers and other
key employees of the Company and its Subsidiaries (as defined
below); (ii) motivating such individuals by means of performance-
related incentives to achieve longer-range performance goals; and
(iii) enabling such individuals to participate in the long-term
growth and financial success of the Company.
SECTION 2. Definitions. As used in the Plan, the
following terms shall have the meanings set forth below:
"Affiliate" shall mean (i) any entity that, directly or
indirectly, is controlled by, or controls, or is under common
control with, the Company and (ii) any entity in which the
Company has a significant equity interest, in either case as
determined by the Committee.
"Award" shall mean any Option, Stock Appreciation
Right, Restricted Stock Award, Restricted Stock Unit Award,
Performance Award or Other Stock-Based Award.
"Award Agreement" shall mean any written agreement,
contract, or other instrument or document evidencing any Award,
which may, but need not, be executed or acknowledged by a
Participant.
"Board" shall mean the Board of Directors of the
Company.
"Change of Control" shall mean the occurrence of any of
the following: (i) a change in control as the term "control" is
defined in Rule 12b-2 promulgated under the Exchange Act; (ii)
when any "Person" (as such term is defined in Sections 3(a)(9)
and 13(d)(3) of the Exchange Act), except for an employee stock
ownership trust or other employee plan of the Company or any
Affiliate, 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 paragraph) 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
seventy-five (75%) percent of the entire Board; (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; (v) if the stockholders 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 eighty (80%) percent of the voting securities of the
surviving entity outstanding immediately after such merger or
consolidation; (vi) if the stockholders of the Company approve a
plan of complete liquidation of the Company; or (vii) if the
stockholders of the Company approve an agreement for the sale or
disposition of all or substantially all of the Company's assets.
Notwithstanding the foregoing, no Change in Control shall be
deemed to have occurred as a result of any event specified in
clauses (i)-(vii) of this paragraph if John Tulin remains the
Chief Executive Officer of the Company following such event.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Committee" shall mean (i) a committee of the Board
designated by the Board to administer the Plan or (ii) if at any
time such a committee has not been so designated by the Board,
the Board or any authorized committee thereof.
"Company" shall mean Swank, Inc., a Delaware
corporation, and any successor thereto.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
"Fair Market Value" shall mean: (i) with respect to
any property other than Shares, the fair market value of such
property determined by such methods or procedures as shall be
established from time to time by the Committee and (ii) with
respect to a Share, as of any date, shall mean (A) if the
principal market for the Shares is a national securities
exchange, the closing sales price per Share 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 Shares is not a national securities exchange and the Shares
are quoted on The Nasdaq Stock Market ("Nasdaq"), and (I) if
actual sales price information is available with respect to the
Shares, the closing sales price per Share on such day on Nasdaq,
or (II) if such information is not available, the average of the
highest bid and lowest asked prices per Share on such day on
Nasdaq, or (C) if the principal market for the Shares is not a
national securities exchange and the Shares are not quoted on
Nasdaq, the average of the highest bid and lowest asked prices
per Share on such day as reported on the 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 a Share shall be determined by the Board by any
method consistent with applicable regulations adopted by the
Treasury Department relating to stock options.
"Incentive Stock Option" shall mean a right to purchase
Shares from the Company that is granted under Section 6 of the
Plan and that is intended to meet the requirements of section 422
of the Code.
"Non-Qualified Stock Option" shall mean a right to
purchase Shares from the Company that is granted under Section 6
of the Plan and that is not intended to be an Incentive Stock
Option, or is intended to be an Incentive Stock Option and under
Section 6 of the Plan is to be regarded as a Non-Qualified Stock
Option.
"Option" shall mean an Incentive Stock Option or a Non-
Qualified Stock Option.
"Other Stock-Based Award" shall mean any right granted
by the Committee under Section 10 of the Plan.
"Participant" shall mean any officer or other key
employee of the Company or its Subsidiaries eligible for an Award
under Section 5 of the Plan and selected by the Committee to
receive an Award under the Plan.
"Performance Award" shall mean any right granted by the
Committee under Section 9 of the Plan.
"Person" shall mean any individual, corporation,
partnership, association, joint-stock company, trust,
unincorporated organization, government or political subdivision
thereof or other entity.
"Plan" shall mean this Swank, Inc. 1998 Equity Incentive
Compensation Plan, as amended from time to time.
"Restricted Stock" shall mean any Share granted by the
Committee under Section 8 of the Plan.
"Restricted Stock Unit" shall mean any unit with a
value equal to the Fair Market Value of a Share granted under
Section 8 of the Plan.
"Rule 16b-3" shall mean Rule 16b-3 as promulgated under
the Exchange Act, or any successor rule or regulation thereto as
in effect from time to time.
"SEC" shall mean the Securities and Exchange Commission
or any successor thereto and shall include the Staff thereof.
"Shares" shall mean the common shares of the Company,
$.10 par value per share, or such other securities of the Company
(i) into which such common shares shall be changed by
reason of a recapitalization, merger, consolidation, split-up,
combination, exchange of shares or other similar transaction or
(ii) as may be determined by the Committee pursuant to Section
4(b).
"Stock Appreciation Right" shall mean any right granted
by the Committee under Section 7 of the Plan.
"Subsidiary" shall mean (i) any entity that, directly
or indirectly, is controlled by the Company and (ii) any entity
in which the Company has a significant equity interest, in either
case as determined by the Committee.
"Substitute Awards" shall have the meaning specified in
Section 4(c) of the Plan.
SECTION 3. Administration.
(a) The Plan shall be administered by the Committee.
Subject to the terms of the Plan and applicable law, and in
addition to other express powers and authorizations conferred on
the Committee by the Plan, the Committee shall have full power
and authority to: (i) designate Participants; (ii) determine the
type or types of Awards to be granted to a Participant; (iii)
determine the number of Shares to be covered by, or with respect
to which payments, rights, or other matters are to be calculated
in connection with, Awards; (iv) determine the terms and
conditions of any Award; (v) determine whether, to what extent,
and under what circumstances Awards may be settled or exercised
in cash, Shares, other securities, other Awards or other
property, or canceled, forfeited, or suspended and the method or
methods by which Awards may be settled, exercised, canceled,
forfeited, or suspended; (vi) determine whether, to what extent,
and under what circumstances cash, Shares, other securities,
other Awards, other property, and other amounts payable with
respect to an Award shall be deferred either automatically or at
the election of the holder thereof or of the Committee; (vii)
interpret, administer, reconcile any inconsistency, correct any
default, or supply any omission in the Plan and any instrument or
agreement relating to an Award made under the Plan; (viii)
establish, amend, suspend, or waive such rules and regulations
and appoint such agents as it shall deem appropriate for the
administration of the Plan; and (ix) make any other determination
and take any other action that the Committee deems necessary or
desirable for the administration of the Plan.
(b) Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations and other
decisions under or with respect to the Plan or any Award shall be
within the sole discretion of the Committee, may be made at any
time and shall be final, conclusive and binding upon all Persons,
including the Company, any Affiliate, any Participant, any holder
or beneficiary of any Award.
(c) No member of the Committee shall be liable for any
action or determination made in good faith with respect to the
Plan or any Award hereunder.
SECTION 4. Shares Available for Awards.
(a) Shares Available. Subject to adjustment as
provided in Section 4(b), the aggregate number of Shares with
respect to which Awards may be granted under the Plan shall be
Three Million (3,000,000). If, after the effective date of the
Plan, any Share covered by an Award granted under the Plan, or to
which such an Award relates, is forfeited, or if an Award has
expired, terminated or been canceled for any reason whatsoever
(other than by reason of exercise or vesting), then the Shares
covered by such Award shall again be, or shall become, Shares
with respect to which Awards may be granted hereunder.
(b) Adjustments. In the event that the Committee
determines that any dividend or other distribution (whether in
the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other
securities of the Company, issuance of warrants or other rights
to purchase Shares or other securities of the Company, or other
similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Committee in its
discretion to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee may, in such
manner as it may deem equitable, adjust any or all of (i) the
number of Shares or other securities of the Company (or the
number and kind of other securities or property) with respect to
which Awards may be granted, (ii) the number of Shares or other
securities of the Company (or the number and kind of other
securities or property) subject to outstanding Awards, and (iii)
the grant or exercise price with respect to any Award or, if
deemed appropriate, make provision for a cash payment to the
holder of an outstanding Award in consideration for the
cancellation of such Award.
(c) Substitute Awards. Awards may, in the
discretion of the Committee, be made under the Plan in
substitution for outstanding awards previously granted by the
Company or its Affiliates or by a company acquired by the Company
or with which the Company combines ("Substitute Awards"). The
number of Shares underlying any Substitute Award shall be counted
against the aggregate number of Shares available for Awards under
the Plan.
(d) Sources of Shares Deliverable Under Awards. Any
Shares delivered pursuant to an Award may consist, in whole or in
part, of authorized and unissued Shares or of treasury Shares.
SECTION 5. Eligibility. Any officer or other key
employee of the Company or any of its Subsidiaries (including any
prospective officer or key employee) shall be eligible to be
designated a Participant.
SECTION 6. Stock Options.
(a) Grant. Subject to the provisions of the Plan,
the Committee shall have sole and complete authority to determine
the Participants to whom Options shall be granted, the number of
Shares to be covered by each Option, the exercise price therefor
and the conditions and limitations applicable to the exercise of
the Option. The Committee shall have the authority to grant
Incentive Stock Options, or to grant Non-Qualified Stock Options,
or to grant both types of Options. In the case of Incentive
Stock Options, the terms and conditions of such grants shall be
subject to and comply with such rules as may be prescribed by
section 422 of the Code. All Options when granted under the Plan
are intended to be Non-Qualified Stock Options, unless the
applicable Award Agreement expressly states that the Option is
intended to be an Incentive Stock Option. If an Option is
intended to be an Incentive Stock Option, and if for any reason
such Option (or any portion thereof) shall not qualify as an
Incentive Stock Option, then, to the extent of such
nonqualification, such Option (or portion thereof) shall be
regarded as a Non-Qualified Stock Option appropriately granted
under the Plan; provided, however, that such Option (or portion
thereof) otherwise complies with the Plan's requirements relating
to Non-Qualified Stock Options.
(b) Exercise Price. The Committee shall establish
the exercise price at the time each Option is granted, which
exercise price shall be set forth in the applicable Award
Agreement. In the sole discretion of the Committee, Options may
be granted with an exercise price that is less than the Fair
Market Value per Share
(c) Exercise. Each Option shall be exercisable at
such times and subject to such terms and conditions as the
Committee may, in its sole discretion, specify in the applicable
Award Agreement or thereafter. The Committee may impose such
conditions with respect to the exercise of Options, including,
without limitation, any condition relating to the application of
federal or state securities laws, as it may deem necessary or
advisable.
(d) Payment. No Shares shall be delivered pursuant
to any exercise of an Option until payment in full of the
aggregate exercise price therefor is received by the Company.
Such payment may be made in cash, certified check, by exchanging
Shares owned by the Participant (which are not the subject of any
pledge or other security interest and which have been owned by
such Participant for at least six months), or by any combination
of the foregoing.
SECTION 7. Stock Appreciation Rights.
(a) Grant. Subject to the provisions of the Plan,
the Committee shall have sole and complete authority to determine
the Participants to whom Stock Appreciation Rights shall be
granted, the number of Shares to be covered by each Stock
Appreciation Right Award, the grant price thereof and the
conditions and limitations applicable to the exercise thereof.
In the sole discretion of the Committee, Stock Appreciation
Rights may be granted with an exercise price that is less than
the Fair Market Value per Share. Stock Appreciation Rights may
be granted in tandem with another Award, in addition to another
Award, or freestanding and unrelated to another Award. Stock
Appreciation Rights granted in tandem with or in addition to
an Award may be granted either at the same time as the Award
or at a later time.
(b) Exercise and Payment. A Stock Appreciation
Right shall entitle the Participant to receive an amount equal to
the excess of the Fair Market Value of a Share on the date of
exercise of the Stock Appreciation Right over the grant price
thereof. The Committee shall determine whether a Stock
Appreciation Right shall be settled in cash, Shares or a
combination of cash and Shares.
(c) Other Terms and Conditions. Subject to the
terms of the Plan and any applicable Award Agreement, the
Committee may change the terms and conditions of any Stock
Appreciation Right from time to time. The Committee may impose
such conditions or restrictions on the exercise of any Stock
Appreciation Right as it shall deem appropriate.
SECTION 8. Restricted Stock and Restricted Stock
Units.
(a) Grant. Subject to the provisions of the Plan,
the Committee shall have sole and complete authority to determine
the Participants to whom Shares of Restricted Stock and
Restricted Stock Units shall be granted, the number of Shares of
Restricted Stock or the number of Restricted Stock Units to be
granted to each Participant, the duration of the period during
which, and the conditions, if any, under which, the Restricted
Stock and Restricted Stock Units may be forfeited to the Company
and the other terms and conditions of such Awards.
(b) Transfer Restrictions. Shares of Restricted
Stock and Restricted Stock Units may not be sold, assigned,
transferred, pledged or otherwise encumbered, except, in the case
of Restricted Stock, as provided in the Plan or the applicable
Award Agreements. Certificates issued in respect of Shares of
Restricted Stock shall be registered in the name of the
Participant and deposited by such Participant, together with a
stock power endorsed in blank, with the Company. Upon the lapse
of the restrictions applicable to such Shares of Restricted
Stock, the Company shall deliver a certificate in respect of the
applicable number of shares to the Participant or the
Participant's legal representative.
(c) Payment. Each Restricted Stock Unit shall have
a value equal to the Fair Market Value of a Share. Restricted
Stock Units shall be paid in cash, Shares, other securities or
other property, as determined in the sole discretion of the
Committee, upon the lapse of the restrictions applicable thereto,
or otherwise in accordance with the applicable Award Agreement.
SECTION 9. Performance Awards.
(a) Grant. The Committee shall have sole and
complete authority to determine the Participants who shall
receive a "Performance Award", which shall consist of a right
which is (i) denominated in cash or Shares, (ii) valued, as
determined by the Committee, in accordance with the
achievement of such performance goals during such performance
periods as the Committee shall establish, and (iii) payable at
such time and in such form as the Committee shall determine.
(b) Terms and Conditions. Subject to the terms of
the Plan and any applicable Award Agreement, the Committee shall
determine the performance goals to be achieved during any
performance period, the length of any performance period, the
amount of any Performance Award and the amount and kind of any
payment or transfer to be made pursuant to any Performance Award.
(c) Payment of Performance Awards. Performance
Awards may be paid in a lump sum or in installments following the
close of the performance period or, in accordance with procedures
established by the Committee, on a deferred basis.
SECTION 10. Other Stock-Based Awards.
(a) General. The Committee shall have authority to
grant to Participants an "Other Stock-Based Award", which shall
consist of any right which is (i) not an Award described in
Sections 6 through 9 above and (ii) an Award of Shares or an
Award denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into
Shares), as deemed by the Committee to be consistent with the
purposes of the Plan. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the
terms and conditions of any such Other Stock-Based Award,
including the price, if any, at which securities may be purchased
pursuant to any Other Stock-Based Award granted under this Plan.
(b) Dividends or Dividend Equivalents. In the sole
and complete discretion of the Committee, an Award, whether made
as an Other Stock-Based Award under this Section 10 or as an
Award granted pursuant to Sections 6 through 9 hereof, may
provide the Participant with dividends or dividend equivalents,
payable in cash, Shares, other securities or other property on a
current or deferred basis.
SECTION 11. Amendment and Termination.
(a) Amendments to the Plan. The Board may amend,
alter, suspend, discontinue, or terminate the Plan or any portion
thereof at any time; provided, however, that any such amendment,
alteration, suspension, discontinuance or termination that would
impair the rights of any Participant or any holder or beneficiary
of any Award theretofore granted shall not to that extent be
effective without the consent of the affected Participant, holder
or beneficiary.
(b) Amendments to Awards. The Committee may waive
any conditions or rights under, amend any terms of, or alter,
suspend, discontinue, cancel or terminate, any Award theretofore
granted, prospectively or retroactively; provided, however, that
any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that would impair the
rights of any Participant or any holder or beneficiary of any
Award theretofore granted shall not to that extent be effective
without the consent of the affected Participant, holder or
beneficiary.
(c) Adjustment of Awards Upon the Occurrence of
Certain Unusual or Nonrecurring Events. The Committee is hereby
authorized to make adjustments in the terms and conditions of,
and the criteria included in, Awards in recognition of (i)
unusual or nonrecurring events (including, without limitation,
the events described in Section 4(b) of the Plan) affecting the
Company, any Affiliate, or the financial statements of the
Company or any Affiliate, or (ii) changes in applicable laws,
regulations, or accounting principles, whenever, in any such
case, the Committee determines such adjustments are appropriate
in order to prevent dilution or enlargement of the benefits or
potential benefits that are intended to be made available under
the Plan, or otherwise.
SECTION 12. Change of Control. In the event of a
Change of Control after the date of the adoption of this Plan,
any outstanding Award then held by a Participant which is not
exercisable or is otherwise unvested shall automatically be deemed
exercisable or otherwise vested, as the case may be, as of
immediately prior to such Change of Control.
SECTION 13. General Provisions.
(a) Nontransferability.
(i) Each Award, and each right under any
Award, shall be exercisable only by the Participant during the
Participant's lifetime, or, if permissible under applicable law,
by the Participant's legal guardian or representative.
(ii) No Award may be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by a Participant
otherwise than by will or by the laws of descent and distribution,
and any such purported assignment, alienation, pledge, attachment,
sale, transfer or encumbrance shall be void and unenforceable
against the Company or any Affiliate; provided, however,
that the designation of a beneficiary shall not constitute an
assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
(b) No Rights to Awards. No Participant or other
Person shall have any claim to be granted any Award, and there
is no obligation for uniformity of treatment of Participants, or holders
or beneficiaries of Awards. The terms and conditions of Awards and
the Committee's determinations and interpretations with respect
thereto need not be the same with respect to each Participant
(whether or not such Participants are similarly situated).
(c) Share Certificates. All certificates for Shares
or other securities of the Company or any Affiliate delivered
under the Plan pursuant to any Award or the exercise thereof
shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable
under the Plan or the rules, regulations, and other requirements
of the Securities and Exchange Commission, any stock exchange
upon which such Shares or other securities are then listed, and
any applicable Federal or state laws, and the Committee may cause
a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
(d) Withholding. A Participant may be required to
pay to the Company or any Affiliates, and the Company or any Affiliate
shall have the right and is hereby authorized to withhold from any
Award, from any payment due or transfer made under any Award or under
the Plan or from any compensation or other amount owing to a Participant,
the amount (in cash, Shares, other securities, other Awards or other
property as determined by the Committee in its sole discretion) of
any applicable withholding taxes or other amounts in respect of an
Award, its exercise, or any payment or transfer under an Award or
under the Plan and to take such other action as may be necessary in
the opinion of the Company to satisfy all obligations for the
payment of such taxes and amounts. The Committee may provide for
additional cash payments to holders of Awards to defray or offset
any tax arising from the grant, vesting, exercise or payments of
any Award.
(e) Award Agreements. Each Award hereunder shall
be evidenced by an Award Agreement which shall be delivered to
the Participant and shall specify the terms and conditions of the
Award and any rules applicable thereto, including, but not
limited to, the effect on such Award of the death, disability or
termination of employment or service of a Participant and the
effect, if any, of such other events as may be determined by the
Committee.
(f) No Limit on Other Compensation Arrangements.
Nothing contained in the Plan shall prevent the Company or any
Affiliate from adopting or continuing in effect other
compensation arrangements, which may, but need not, provide for
the grant of options, restricted stock, Shares and other types of
awards provided for hereunder and such arrangements may be either
generally applicable or applicable only in specific cases.
(g) No Right to Employment. The grant of an Award
shall not be construed as giving a Participant the right to be
retained in the employ of the Company or any Affiliate.
(h) No Rights as Stockholder. Subject to the
provisions of the applicable Award, no Participant or holder or
beneficiary of any Award shall have any rights as a stockholder
with respect to any Shares to be distributed under the Plan until
a certificate or certificates representing such Shares shall be
delivered to such Participant, holder or beneficiary, as the case
may be. Notwithstanding the foregoing, in connection with each
grant of Restricted Stock hereunder, the applicable Award shall
specify if and to what extent the Participant shall be entitled
to the rights of a stockholder in respect of such Restricted
Stock.
(i) Governing Law. The validity, construction, and
effect of the Plan and any rules and regulations relating to the
Plan and any Award Agreement shall be determined in accordance
with the laws of the State of Delaware.
(j) Severability. If any provision of the Plan or
any Award is or becomes or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction or as to any Person or Award,
or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or
deemed amended to conform to the applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the
Award, such provision shall be stricken as to such jurisdiction,
Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.
(k) Other Laws. The Committee may refuse to issue
or transfer any Shares or other consideration under an Award if,
acting in its sole discretion, it determines that the issuance or
transfer of such Shares or such other consideration might violate
any applicable law or regulation, including Section 16(b) of the
Exchange Act, and any payment tendered to the Company by a
Participant, other holder or beneficiary in connection with the
exercise of such Award shall be promptly refunded to the relevant
Participant, holder or beneficiary. Without limiting the
generality of the foregoing, no Award granted hereunder shall
be construed as an offer to sell securities of the Company, and
no such offer shall be outstanding, unless and until the Committee
in its sole discretion has determined that any such offer, if made,
would be in compliance with all applicable requirements of the U.S.
federal securities laws.
(l) No Trust or Fund Created. Neither the Plan nor
any Award shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the
Company or any Affiliate and a Participant or any other Person.
To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award,
such right shall be no greater than the right of any unsecured
general creditor of the Company or any Affiliate.
(m) No Fractional Shares. No fractional Shares
shall be issued or delivered pursuant to the Plan or any Award,
and the Committee shall determine whether cash, other securities,
or other property shall be paid or transferred in lieu of any
fractional Shares or whether such fractional Shares or any rights
thereto shall be canceled, terminated, or otherwise eliminated.
(n) Headings. Headings are given to the Sections
and subsections of the Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material
or relevant to the construction or interpretation of the Plan or
any provision thereof.
SECTION 14. Term of the Plan.
(a) Effective Date. The Plan shall become
effective as of the date of its approval by the Board; provided,
however, that no Award shall be exercisable unless the Plan is
approved by the stockholders of the Company.
(b) Expiration. The Plan shall terminate 10 years
after the earlier of the date on which it becomes effective or
the date it is approved by the stockholders of the Company.
Notwithstanding the foregoing, all Awards made under the Plan
prior to such termination date shall remain in effect until such
Awards have been satisfied or terminated in accordance with the
terms and provisions of the Plan and the applicable Award
Agreement.
SWANK, INC.
6 Hazel Street, Attleboro, Massachusetts 02703
Proxy for Annual Meeting of Stockholders
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Marshall Tulin
and John Tulin, and each of them, with full power of substitution,
the attorneys and proxies of the undersigned, to attend the 1998
Annual Meeting of Stockholders of SWANK, INC. (the "Company") to
be held at the Company's offices at 6 Hazel Street, Attleboro,
Massachusetts 02703, on April 23, 1998 at 11:00 A.M. local time,
and all adjournments thereof, to vote all shares of Common Stock of
the Company which the undersigned may be entitled to vote upon the
following matters:
(Please Sign and Date on the Reverse Side)
A X Please mark your votes as in this example.
FOR WITHHOLD
(except as indicated AUTHORITY
to the contrary below) TO VOTE FOR
1. Election of two (2) Class III
directors to serve on the
Company's Board of Directors; _____ _____
Nominees: Marshall Tulin
Raymond Vise
For, except vote withheld from the following nominee(s)
________________________________________
FOR AGAINST ABSTAIN
2. The approval of the appointment
of Coopers & Lybrand, L.L.P.
as the independent accountants
of the Company for the year 1998; _____ _____ _____
3. The approval of the 1998 Equity
Incentive Compensation Plan; and _____ _____ _____
4. 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 THE NOMINEES FOR DIRECTOR "FOR" ITEM 2 AND ITEM 3 AND
WITH DISCRETION ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE MEETING.
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.
