SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] Filed by a party other than the registrant
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
SIRCO INTERNATIONAL CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
PRELIMINARY COPY
SIRCO INTERNATIONAL CORP.
24 Richmond Hill Avenue
Stamford, Connecticut 06901
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
September 25, 1996
To the Shareholders of Sirco International Corp.:
Notice is hereby given that the Annual Meeting of Shareholders of Sirco
International Corp., a New York corporation (the "Company"), will be held at the
Company's offices located at 366 Fifth Avenue, Suite 205, New York, New York
10001, on Wednesday, September 25, 1996 at 10:00 A.M., local time, for the
following purposes:
1. To elect six (6) directors to the Board of Directors for the ensuing
year;
2. To approve and adopt a proposal to amend the Company's 1995 Stock
Option Plan to increase the number of shares of Common Stock that may be issued
thereunder from 200,000 shares to 400,000 shares;
3. To approve and adopt the 1996 Restricted Stock Award Plan of the
Company; and
4. To consider and act upon such other business as may properly come
before the meeting.
Only shareholders of record at the close of business on August 15, 1996
will be entitled to vote at the Annual Meeting.
Whether or not you expect to attend the Annual Meeting, please mark,
sign and promptly return the enclosed proxy in the postpaid envelope provided.
If you receive more than one proxy because your shares are registered in
different names or addresses, each such proxy should be signed and returned so
that all your shares will be represented at the meeting.
By Order of the Board of Directors,
Joel Dupre,
Chairman of the Board
August 19, 1996
PRELIMINARY COPY
SIRCO INTERNATIONAL CORP.
24 Richmond Hill Avenue
Stamford, Connecticut 06901
PROXY STATEMENT
This Proxy Statement is furnished to shareholders of Sirco
International Corp., a New York corporation (the "Company"), in connection with
the solicitation, by order of the Board of Directors of the Company, of proxies
to be voted at the Annual Meeting of Shareholders to be held on Wednesday,
September 25, 1996 at 10:00 A.M., New York City time, at the Company's offices
located at 366 Fifth Avenue, Suite 250, New York, New York 10001 and at any
adjournment or adjournments thereof (the "Annual Meeting"). The accompanying
proxy is being solicited on behalf of the Board of Directors of the Company.
This Proxy Statement and the enclosed proxy card were first mailed to
shareholders of the Company on or about August 19, 1996, accompanied by the
Company's Annual Report on Form 10-K, as amended, for the fiscal year ended
November 30, 1995, and the Company incorporates the contents of such report
herein by reference thereto.
At the Annual Meeting, the following matters will be considered and
voted upon:
(1) Election of six (6) directors to hold office until the 1997 Annual
Meeting of Shareholders or until their successors shall have been duly elected
and qualified;
(2) Approval and adoption of a proposal to amend the Company's 1995
Stock Option Plan to increase the number of shares of Common Stock that may be
issued thereunder from 200,000 shares to 400,000 shares;
(3) Approval and adoption of the 1996 Restricted Stock Award Plan of
the Company; and
(4) Such other business as may properly come before the Annual Meeting.
Voting and Revocation of Proxies; Adjournment
All of the voting securities of the Company represented by valid
proxies, unless the shareholder otherwise specifies therein or unless revoked,
will be voted FOR the election of the persons nominated as directors, FOR the
other proposals set forth herein, and at the discretion of the proxy holders on
any other matters that may properly come before the Annual Meeting. The Board of
Directors does not know of any matters to be considered at the Annual Meeting
other than the election of directors and the other proposals set forth above.
If a shareholder has appropriately specified how a proxy is to be
voted, it will be voted accordingly. Any shareholder has the power to revoke
such shareholder's proxy at any time before it is voted. A proxy may be revoked
by delivery of a written statement to the Secretary of the Company stating that
the proxy is revoked, by a subsequent proxy executed by the person executing the
prior proxy and presented to the Annual Meeting, or by voting in person at the
Annual Meeting.
A plurality of the votes cast at the Annual Meeting by the shareholders
entitled to vote in the election is required to elect the director nominees, and
a majority of the votes cast by the shareholders entitled to vote at the meeting
is required to take any other action. Although no formal agreement exists, the
Company anticipates that the 681,000 shares (approximately 52.0% of the
outstanding shares) of the Common Stock, $.10 par value (the "Common Stock"), of
the Company beneficially owned by Mr. Joel Dupre, the Chairman of the Board and
Chief Executive Officer of the Company, will be voted as recommended for the
director nominees and for the other proposals set forth herein. Accordingly, the
Board of Directors anticipates that its nominees will be elected to serve as the
Company's directors and that the other proposals set forth herein will be
approved and adopted. In the event that sufficient votes in favor of any of the
matters to come before the meeting are not received by the date of the Annual
Meeting, the persons named as proxies may propose one or more adjournments of
the Annual Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of the holders of a majority of
the shares of Common Stock present in person or by proxy at the Annual Meeting.
The persons named as proxies will vote in favor of any such proposed adjournment
or adjournments.
Solicitation
The solicitation of proxies pursuant to this Proxy Statement will be
primarily by mail. In addition, certain directors, officers or other employees
of the Company may solicit proxies by telephone, telegraph, mail or personal
interviews, and arrangements may be made with banks, brokerage firms and others
to forward solicitation material to the beneficial owners of shares held by them
of record. No additional compensation will be paid to directors, officers or
other employees of the Company for such services. The total cost of any such
solicitation will be borne by the Company and will include reimbursement of
brokerage firms and other nominees.
Quorum and Voting Rights
The Board of Directors of the Company has fixed Thursday, August 15,
1996 as the record date (the "Record Date") for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting. Holders of
record of shares of Common Stock at the close of business on the Record Date
will be entitled to one vote for each share held. The presence, in person or by
proxy, of the holders of a majority of the outstanding voting securities
entitled to vote at the Annual Meeting is necessary to constitute a quorum at
the Annual Meeting.
Change in Control of the Company
On March 20, 1995, pursuant to a Stock Purchase Agreement, dated as of
March 20, 1995 (the "Stock Purchase Agreement"), among Yashiro Company, Ltd.
("YC, Ltd."), Yashiro Co., Inc. ("YC, Inc."; together with YC, Ltd. sometimes
referred to herein collectively as the "Sellers"), Joel Dupre, the current
Chairman of the Board and Chief Executive Officer of the Company ("Mr. Dupre"),
Pacific Million Enterprise, Ltd., a Hong Kong corporation ("Pacific"), Cheng-Sen
Wang ("Mr. Wang") and Albert H. Cheng ("Mr. Cheng"; and together with Mr. Dupre,
Pacific and Mr. Wang sometimes collectively referred to herein as the "Buyers"),
the Buyers acquired an aggregate of 681,000 shares of Common Stock, then
constituting approximately 56.04% of the issued and outstanding shares of Common
Stock, for an aggregate purchase price of $1,532,230.
Mr. Dupre acquired 414,334 shares of Common Stock, then constituting
approximately 34.10% of the issued and outstanding shares of Common Stock, in
exchange for a cash payment of $400,001.50 and the issuance of a promissory note
(the "Promissory Note") in the principal amount of $532,250 in favor of YC,
Inc., individually and as agent for YC, Ltd. The Promissory Note bears interest
at the rate of 10% per annum payable quarterly in arrears commencing on June 30,
1996, with principal payable in equal annual installments of $88,708.33
commencing on March 31, 1996. Mr. Dupre borrowed $200,000 of the cash portion of
the purchase price from Mr. Wang, which loan is evidenced by a promissory note
dated March 9, 1995, bearing interest at 10% per annum and maturing on March 31,
2000. Mr. Dupre borrowed an additional $200,000 from Mr. Cheng, which loan is
evidenced by a promissory note dated March 13, 1995, bearing interest at 7 3/4%
per annum and maturing on March 31, 2000.
Pacific acquired 133,333 shares of Common Stock, then constituting
approximately 10.97% of the issued and outstanding shares of Common Stock, for
$299,999.25 in cash. The funds for the purchase price were obtained from
Pacific's working capital. Mr. Wang acquired 88,889 shares of Common Stock, then
constituting approximately 7.31% of the issued and outstanding shares of Common
Stock, and Mr. Cheng acquired 44,444 shares of Common Stock, then constituting
approximately 3.66% of the issued and outstanding shares of Common Stock, for
cash payments of $200,000.25 and $99,999, respectively. The purchase prices were
paid from Mr. Wang's and Mr. Cheng's respective personal funds.
As an inducement to the Sellers to enter into the Stock Purchase
Agreement and to cause Bueno of California, Inc., a Delaware corporation
("Bueno") and an affiliate of Sellers, to enter into the Asset Purchase
Agreement (as defined below) and related agreements, Mr. Dupre executed and
delivered to the Sellers a guaranty, dated March 20, 1995, pursuant to which Mr.
Dupre guaranteed all of the obligations of the Company under the Letter of
Credit Agreement, the Non-Competition Agreements and the Severance Agreement
(each as defined below).
In addition, the Buyers entered into a Pledge Agreement, dated as of
March 20, 1995 (the "Pledge Agreement"), with Bueno and YC, Inc., on its own
behalf and as agent for YC, Ltd. Pursuant to the Pledge Agreement, the Buyers
pledged their shares of Common Stock to Bueno and the Sellers as security for
the payment of (i) all obligations of Mr. Dupre under the Promissory Note, (ii)
all obligations of the Buyers under the Stock Purchase Agreement, (iii) all
obligations of the Company under the Asset Purchase Agreement, (iv) all
obligations of the Company under any agreement that is an exhibit to the Asset
Purchase Agreement, including the Exclusive Purchasing Agreement, the
Non-Competition Agreements and the Severance Agreement and (v) all obligations
of the Buyers under the Pledge Agreement.
Concurrently with the closing of the transactions contemplated by the
Stock Purchase Agreement and the Asset Purchase Agreement, Takeshi Yamaguchi
resigned from the Board of Directors and the office of President of the Company;
Yutaka Yamaguchi and Neil Grundman resigned from the Board of Directors of the
Company; and Tsuguya Saeki resigned from the offices of Executive Vice President
and Chief Financial Officer of the Company. Pursuant to a Severance Agreement,
dated as of March 20, 1995, with Takeshi Yamaguchi, the Company agreed to pay
Mr. Yamaguchi $100,000 plus interest at the rate of 10% per annum on March 31,
1996 and $100,000 plus interest at a rate of 10% per annum on March 31, 1997. On
March 29, 1995, the Board of Directors of the Company, consisting of Mr. Dupre,
Ian Mitchell, Eric Smith and Douglas Turner, elected Mr. Dupre as the Chairman
of the Board and Chief Executive Officer of the Company.
Concurrently with the acquisition by the Buyers of the shares of Common
Stock under the Stock Purchase Agreement, the Company and Bueno entered into an
Asset Purchase Agreement, dated as of March 20, 1995 (the "Asset Purchase
Agreement"), pursuant to which the Company sold to Bueno all of the assets
relating to the Company's handbag division for a negotiated purchase price of
$1,785,605.55, of which $86,167.82 was paid in cash and $1,699,447.73 was
applied by the Company to the repayment of indebtedness of the Company to the
Sellers. The aggregate indebtedness owed by the Company to the Sellers at the
date of the acquisition was $2,238,506.01. The Sellers, which are affiliates of
Bueno, are controlled by Messrs. Yutaka and Takeshi Yamaguchi.
In connection with the Asset Purchase Agreement, each of the Sellers,
Yutaka Yamaguchi and Takeshi Yamaguchi entered into non-competition agreements
with the Company (collectively, the "Non-Competition Agreements"). Pursuant to
the terms of the Non-Competition Agreements, each of the Sellers and Messrs.
Yutaka and Takeshi Yamaguchi agreed not to compete with the Company's luggage
and related products business prior to the earlier of March 20, 2001 and the
date of repayment in full of all amounts due under the Promissory Note (the
"Restricted Period"). In consideration of their agreements to not compete, the
Company is obligated to pay $60,000 to each of the Sellers and each of Messrs.
Yutaka and Takeshi Yamaguchi, payable in three equal annual installments
commencing on March 31, 1996. In addition, pursuant to a separate
non-competition agreement, the Company agreed not to compete with Bueno in the
handbag business during the Restricted Period.
Also in connection with the Asset Purchase Agreement, the Company
entered into an Exclusive Purchasing Agreement, dated as of March 20, 1995, with
YC, Inc. (the "Exclusive Purchasing Agreement"), pursuant to which the Company
granted to YC, Inc. and its designees the exclusive right to purchase in Japan,
at prices to be mutually agreed upon, any goods manufactured or purchased by the
Company from unaffiliated vendors (the "Vendors"). Under the Exclusive
Purchasing Agreement, YC, Inc. will pay a commission to the Company for all
goods purchased by it or its designees equal to 5% of the purchase price of all
such goods paid by the Company (or directly by YC, Inc. or its designees) to the
Vendors. The Exclusive Purchasing Agreement will terminate on the date that all
amounts due under the Promissory Note are repaid in full and all obligations of
the Company, Mr. Dupre, Pacific, Mr. Wang or Mr. Cheng, as the case may be,
under the Stock Purchase Agreement and the Asset Purchase Agreement and all
agreements that are exhibits thereto are satisfied in full.
In addition, pursuant to a letter agreement (the "Letter of Credit
Agreement"), YC, Inc. has agreed to issue, or cause to be issued, for the
account of the Company, from time to time until March 20, 1997, one or more
unsecured trade letters of credit in an aggregate amount of up to the lesser of
$1,200,000 or 35% of the book value of all inventory owned by the Company. With
respect to each letter of credit issued under the Letter of Credit Agreement,
the Company will be obligated to pay an origination fee equal to 3% of the full
amount of such letter of credit and a financing fee based upon the outstanding
balance of any letter of credit equal to the base rate of interest announced
publicly by Citibank, N.A. in New York, New York, from time to time, as its base
rate plus two percent (2%).
Common Stock Owned by Directors, Officers and Other Beneficial Owners
The following table sets forth, as of August 1, 1996, the names,
addresses and number of shares of Common Stock beneficially owned by all persons
known to the management of the Company to be beneficial owners of more than 5%
of the outstanding shares of Common Stock, and the names and number of shares
beneficially owned by all directors of the Company and all executive officers
and directors of the Company as a group (except as indicated, each beneficial
owner listed exercises sole voting power and sole dispositive power over the
shares beneficially owned):
Shares Percent of
Beneficially Outstanding
Name and Address Owned Common Stock
- ---------------- ------------- ------------
Joel Dupre(1) 681,000 52.0%
c/o Sirco International Corp.
24 Richmond Hill Avenue
Stamford, Connecticut 06901
Pacific Million Enterprise Ltd.(2)(3) 133,333 10.2%
The Gateway, Tower 2, Suite 1807
25 Canton Road
Tsimshatsui, Kowloon, Hong Kong
Joseph Takada(2)(3) 133,333 10.2%
c/o Pacific Million Enterprise Ltd.
The Gateway, Tower 2, Suite 1807
25 Canton Road
Tsimshatsui, Kowloon, Hong Kong
Cheng-Sen Wang(2) 88,889 6.8%
c/o Kao-Lien International Co., Ltd.
404 Jen-Air Road
6th Floor, Section 4
Taipei, Taiwan R.O.C.
Albert H. Cheng(2)(4) 44,444 3.4%
c/o Constellation Enterprises Co., Ltd.
199 Chung Ching North Road
11th Floor, Section 3
Taipei, Taiwan R.O.C.
Ian Mitchell 0 0
Eric Smith 0 0
Douglas Turner 0 0
Eric M. Hellige 0 0
Paul Riss(5) 10,000 *
Herzog, Heine, Geduld, Inc.(6) 66,931 5.1%
26 Broadway
New York, New York 10004
All directors and executive 691,000 52.4%
officers of the Company as a
group (six individuals)(7)
- --------------
* Less than 1%
(1) Includes 266,666 shares for which Mr. Dupre has the right to exercise
sole voting control pursuant to a Voting Agreement dated as of May 1,
1995 (the "Voting Agreement") under which Pacific, Mr. Wang and Mr.
Cheng granted Mr. Dupre the right to exercise sole voting control with
respect to 133,333, 88,889, and 44,444 shares, respectively, held of
record by them.
(2) As a result of the Voting Agreement, Mr. Dupre, Pacific (together with
Mr. Takada -- see Note 3), Mr. Wang and Mr. Cheng may be deemed to be a
"group" within the meaning of Section 13d-3 of the Securities Exchange
Act of 1934, and, therefore, deemed to beneficially own an aggregate of
681,000 shares of Common Stock.
(3) Pacific has granted to Mr. Dupre an option to purchase all of the
133,333 shares it owns of record. By virtue of his ownership of 95% of
the issued and outstanding shares of common stock of Pacific, Joseph
Takada may be deemed to be the beneficial owner of all the shares of
Common Stock beneficially owned by Pacific.
(4) Mr. Cheng has granted to Mr. Dupre an option to purchase all of the
44,444 shares he owns of record.
(5) Consists of 10,000 shares of Common Stock subject to an option that is
exercisable within 60 days.
(6) Herzog, Heine, Geduld, Inc. reported ownership of 66,931 shares of
Common Stock pursuant to a Schedule 13G received by the Company in
December 1991, as amended in January 1992.
(7) Includes 10,000 shares of Common Stock subject to options exercisable
within 60 days.
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the directors of the Company
shall not be less than three nor more than fifteen in number. In March 1990, the
number of directors of the Company was set at nine. There have been two
vacancies on the Board since November 1992, and an additional vacancy since
March 1995. The term of office of the directors is one year, expiring on the
date of the next annual meeting, or when their respective successors shall have
been elected and shall qualify, or upon their prior death, resignation or
removal.
Except where the authority to do so has been withheld, it is intended
that the persons named in the enclosed proxy will vote for the election of the
nominees to the Board of Directors listed below to serve until the date of the
next annual meeting and until their successors are duly elected and qualified.
Although the directors of the Company have no reason to believe that the
nominees will be unable or decline to serve, in the event that such a
contingency should arise, the accompanying proxy will be voted for a substitute
(or substitutes) designated by the Board of Directors.
The following table sets forth certain information regarding the
director nominees, all of whom currently serve as directors of the Company:
Principal Occupation for Past Five Years and
Name Age Current Public Directorships or Trusteeships
- ---- --- --------------------------------------------
Joel Dupre 43 Director since 1990; Chairman of the Board and Chief Executive Officer of the
Company since March 1995; Executive Vice President from November 1992 to March
1995 and a Vice President from 1989 to 1992.
Eric M. Hellige 41 Partner for more than five years of Pryor, Cashman, Sherman & Flynn, counsel to
the Company.
Ian Mitchell 58 Director since 1988; President and Managing Director of Sirco Leatherwares Ltd.,
a former subsidiary of the Company, since 1981.
Paul Riss 41 Chief Financial Officer of Sequins International Inc., a manufacturer of sequined
fabrics and trimmings, since June 1992; Chief Financial Officer, Treasurer and
Secretary of ComponentGuard Inc., an administrator of extended warranty
contracts, from August 1990 to June 1992. ComponentGuard Inc. filed a petition
for protection under Chapter 11 of the United States Bankruptcy Code in May 1992.
Eric Smith 51 Director since 1988; Vice President-General Manager of West Coast Distribution
Center of the Company since 1983.
Douglas Turner 57 Director since 1978; President of Sirco International (Canada), Ltd., a
subsidiary of the Company, for more than five years.
The term of office of the directors is one year, expiring on the date
of the next annual meeting and thereafter until their respective successors
shall have been elected and shall qualify, or until their prior death,
resignation or removal.
Board Meetings and Committees; Management Matters
The Board of Directors held five meetings during the fiscal year ended
November 30, 1995. Each director attended at least 75% of the Board and
Committee meetings of which he was a member. From time to time, the members of
the Board of Directors act by unanimous written consent pursuant to the laws of
the State of New York. No fees are paid to directors for attendance at meetings
of the Board.
The Board of Directors has a Stock Option Committee, which met one time
during the fiscal year ended November 30, 1995 and currently consists of Eric M.
Hellige and Ian Mitchell. The Stock Option Committee has exclusive authority to
grant options to the Company's executive officers under the 1995 Stock Option
Plan. The Board of Directors does not have standing audit, nominating or
compensation committees or, except in the case of the grant of stock options by
the Stock Option Committee, any committee performing similar functions.
The Directors recommend a vote FOR the election of each of the director
nominees.
PROPOSAL TO AMEND
THE 1995 STOCK OPTION PLAN
Proposed Amendment
On August 2, 1996, the Board of Directors adopted, subject to
shareholder approval, an amendment to the Company's 1995 Stock Option Plan (the
"Option Plan") to increase the number of shares of Common Stock that may be
issued thereunder from 200,000 shares to 400,000 shares. At July 1, 1996,
options with respect to an aggregate of 100,000 shares of Common Stock were
outstanding under the Option Plan, and no shares of Common Stock were available
for additional grants.
The Option Plan
The purpose of the Option Plan, which was adopted in June 1995, is to
enable the Company to compete successfully in attracting, motivating and
retaining directors and key employees with outstanding abilities by making it
possible for them to purchase shares of Common Stock on terms that will give
them a more direct and continuing interest in the future success of the
Company's business. The Option Plan is intended to provide a method whereby
directors and key employees and others who are making and are expected to
continue to make substantial contributions to the successful growth and
development of the Company may be offered additional incentives thereby
advancing the interests of the Company and its shareholders. The Board believes
that the Option Plan increases the Company's flexibility in furthering such
purposes.
Terms of the Option Plan
The Option Plan provides for the grant of incentive stock options
("ISO"), as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), non-qualified stock options, tandem stock appreciation
rights and stock appreciation rights exercisable in conjunction with stock
options . The purchase price of shares of Common Stock covered by an ISO must be
at least 100% of the fair market value of such shares of Common Stock on the
date the option is granted and, for all options is payable in either cash or
shares of Common Stock, or any combination thereof. No ISO will be granted to
any employee who immediately after the grant would own more than 10% of the
total combined voting power or value of all classes of capital stock of the
Company, or any subsidiary of the Company, unless the option price is at least
110% of the fair market value of the shares of Common Stock subject to the
option, and the option on the date of grant shall expire not later than five
years from the date the option is granted. In addition, the aggregate fair
market value of the shares of Common Stock, determined at the date of grant,
with respect to which ISOs are exercisable for the first time by an optionee
during any calendar year, shall not exceed $100,000. No ISO may be granted under
the Option Plan to any director who is not an employee of the Company and no
option or stock appreciation right may be granted under the Option Plan after
July 1, 2005.
Administration of the Option Plan
The Option Plan is administered by the Board of Directors of the
Company. The Board will have full authority, in its sole discretion, to
interpret the Option Plan, to establish from time to time regulations for the
administration of the Option Plan and to determine the directors and key
employees to whom options will be granted and the terms of the options. The term
"employees," as defined under the Option Plan, encompasses employees, including
officers, regularly employed on a salary basis by the Company or any subsidiary
of the Company. The Board may delegate all or part of its authority to
administer the Option Plan to a committee appointed by the Board and consisting
of not less than two members thereof. No director may serve as a member of such
committee unless such director is a "disinterested person" within the meaning of
Rule 16(b)(3) ("Rule 16(b)(3)") under the Securities Exchange Act of 1934, as
amended (the "1934 Act").
Exercise of Options and Rights
Under the Option Plan, an option or stock appreciation right may be
exercised in such installments as are specified in the terms of its grant, but
not sooner than one year from the date of its grant, unless otherwise provided
at the time of its grant. Each option or stock appreciation right shall expire
ten years after the date granted (or five years in the case of an ISO granted to
any person who owns more than 10% of the Company's voting stock).
Tandem stock appreciation rights and stock appreciation rights granted
in conjunction with options may be exercised only to the extent, during the
period and on the conditions that their related options are exercisable and may
not be exercised after the expiration or termination of their related options.
Options and stock appreciation rights are not transferable by the
option holder otherwise than by will or the laws of descent and distribution and
are exercisable during the option holder's lifetime only by such person.
If an option holder ceases to be continuously employed by the Company
or any of its subsidiaries for any reason other than death or for cause, such
holder may exercise the option and/or any stock appreciation rights at any time
within three months after such termination (provided it shall not have first
expired by its own term), but only to the extent that such holder was entitled
to do so at the date employment terminated. If an option holder dies while
employed by the Company or within a period of three months after termination of
employment for any reason other than cause, the option and/or any stock
appreciation right may be exercised at any time within one year after the date
of such death (provided it shall not have first expired by its own terms), but
only to the extent the decedent was entitled to do so at the date of death. If
an option holder's employment is terminated for cause as determined by the
Board, the option and/or any stock appreciation right terminates concurrently
with the termination of such employment.
Amendment of the Option Plan
The Board of Directors may alter, amend or terminate the Option Plan at any
time with respect to shares of Common Stock not subject at such time to options
or stock appreciation rights, but such amendments shall not adversely affect the
rights of any person under any option or stock appreciation right theretofore
granted without such person's consent. The Board may not, without the approval
of the shareholders of the Company, increase the aggregate number of shares of
Common Stock to be issued pursuant to options or stock appreciation rights
granted (except as permitted by section 3 of the Option Plan); decrease the
minimum option price; increase the maximum amount a holder of a stock
appreciation right may receive upon its exercise; extend the option period with
respect to any option or stock appreciation right; permit the granting of
options or stock appreciation rights to anyone other than as provided in the
Option Plan; or provide for the administration of the Option Plan by the Board
or a committee appointed by the Board unless such administration meets the
requirements for exemption provided by Rule 16b-3.
Federal Income Tax Consequences
The Company has been advised that ISOs, non-qualified stock options and
stock appreciation rights granted under the Option Plan are subject to the
following Federal income tax treatment:
Incentive Stock Options. An employee will recognize no taxable income
and no deduction is available to the Company upon either the grant or exercise
of an ISO.
In general, if Common Stock acquired upon the exercise of an ISO is
subsequently sold, the realized gain or loss, if any, will be measured by the
difference between the exercise price of the option and the amount realized on
the sale. Any such gain or loss on the sale will generally be treated as
long-term capital gain or loss if the holding period requirements have been
satisfied. The holding period requirements will be satisfied if the shares are
not sold within two years of the date of grant of the option pursuant to which
such shares were transferred or within the one-year period beginning on the day
of the transfer of such shares pursuant to the exercise of the option.
If Common Stock acquired upon the exercise of an ISO is subsequently
sold and the holding period requirements noted above are not satisfied (a
"disqualifying disposition"), the employee will recognize ordinary income for
the year in which the disqualifying disposition occurs in an amount equal to the
excess of the fair market value of such Common Stock on the date the option was
exercised (or, if lower, the amount realized on the sale) over the exercise
price of the option. Any additional gain recognized on the sale will be a
capital gain, and will be long-term or short-term depending upon whether the
sale occurs more than one year after the date of exercise. The amount recognized
by the employee as ordinary income will be treated as compensation and the
Company will receive a corresponding deduction. The Company may be required to
withhold additional taxes from the wages of the employee with respect to the
amount of ordinary income taxable to the employee.
The excess of the fair market value of the Common Stock acquired by
exercise of an ISO (determined on the date of exercise) over the exercise price
is in effect an item of tax preference which must be taken into account for
purposes of calculating the "alternative minimum tax" of Section 55 of the Code.
If a disqualifying disposition is made of such Common Stock, however, during the
same year acquired, there will be no tax preference item for alternative minimum
tax purposes.
Non-qualified Stock Options and Stock Appreciation Rights.
Non-qualified stock options granted under the Option Plan do not result in any
income to the optionee at the time of grant or any tax deduction to the Company
at that time. Except as stated below with respect to officers, upon exercise of
a non-qualified option, the excess of the fair market value of the Common Stock
acquired (determined at the time of exercise) over its cost to the optionee (i)
is taxable to the optionee as ordinary income and (ii) is deductible by the
Company, subject to general rules relating to the reasonableness of
compensation; and the optionee's tax basis for the shares is the fair market
value at the time of exercise.
Gain or loss recognized upon disposition of shares acquired pursuant to
the exercise of a non-qualified option will generally be reportable as short or
long-term gain or loss depending on the length of time the shares were held by
the optionee as of the date of disposition.
The exercise of a stock appreciation right by an employee results in
taxable compensation to such employee in the amount of the cash received plus an
amount equal to the fair market value (determined at the time of exercise) of
any shares received.
The Company believes that compensation received by participants on the
exercise of nonqualified stock options or the disposition of shares acquired
upon the exercise of ISOs will be considered performance-based compensation and
thus not subject to the $1,000,000 limit of Section 162(m) of the Code.
Vote Required
The proposed amendment to the Option Plan will become effective only
upon approval by the holders of a majority of the outstanding shares of Common
Stock.
The Board of Directors recommends a vote FOR approval of the proposed
amendment to the Option Plan.
PROPOSAL TO ADOPT THE 1996
RESTRICTED STOCK AWARD PLAN
The Restricted Stock Award Plan
On August 2, 1996, the Board of Directors of the Company adopted the
Sirco International Corp. 1996 Restricted Stock Award Plan (the "Restricted
Stock Award Plan") and directed that the Restricted Stock Award Plan be
submitted to the shareholders of the Company for their approval at the Annual
Meeting. The purpose of the Restricted Stock Award Plan is to encourage and
provide an additional incentive to officers and other key employees of the
Company and its subsidiaries to increase the value of the Company and its Common
Stock by permitting them to acquire a significant equity interest in the
Company. The Restricted Stock Award Plan also is intended to aid the Company in
attracting and retaining superior personnel and to strengthen their desire to
remain in the Company's employ. The following summary description of the
Restricted Stock Award Plan is qualified in its entirety by reference to the
full text of the Restricted Stock Award Plan which appears in Exhibit A hereto.
An aggregate of 200,000 shares of Common Stock of the Company has been
reserved for issuance in connection with awards granted under the Restricted
Stock Award Plan. Such shares may be awarded from either authorized and unissued
shares or treasury shares. The maximum number of shares that may be awarded
under the Restricted Stock Award Plan to any individual officer or key employee
is 100,000. Approximately five employees of the Company and its subsidiaries are
currently eligible to participate in the Restricted Stock Award Plan.
Administration of the Restricted Stock Award Plan
The Restricted Stock Award Plan is to be administered by a Committee of
the Board of Directors, none of the members of which are eligible to participate
in the Restricted Stock Award Plan (the "Committee"). The Company intends that
the Committee initially will be the Stock Option Committee of the Board of
Directors. The qualifications of the Committee members will comply with Rule
16b-3, or any successor rule or regulation. The Committee has the discretion to
determine, among other things, the officers and key employees to whom awards are
to be granted and the number of shares that may be awarded to each such officer
or key employee.
Vesting of Awards
Under the provisions of the Restricted Stock Award Plan, all of the
shares of stock awarded vest when a participant dies or becomes disabled. All or
a portion of the stock awarded will also vest upon a participant's retirement,
depending on the period of time between the award date and the date of
retirement. Pursuant to the terms of the proposed Restricted Stock Award Plan,
all restrictions will be removed upon retirement if the award has been
outstanding more than six years; restrictions will be removed as to two-thirds
of the award if it has been outstanding on the date of retirement for more than
five years; and restrictions will be removed as to one-third of the award if it
has been outstanding for more than four but not more than five years on the date
of retirement. If retirement occurs within four years from the date of award, or
if the participant leaves the employment of the Company at any time for any
reason other than retirement, death or disability, the shares will be forfeited.
However, the Committee may, at its discretion, remove restrictions for
terminated employees. In addition, the Committee has determined that all
restrictions should be removed and the restricted stock should unconditionally
vest if a share of Common Stock of the Company should triple in price from the
price of the stock on the date of the award, subject only to restrictions
necessary to retain exemptions under the plan from liability under the insider
short-swing trading prohibitions of Section 16(b) of the 1934 Act. If the price
of a share of Common Stock of the Company should double from the price of the
stock on the date of the award, restrictions on one-half of the shares would be
removed and that amount of shares would be immediately and unconditionally
vested.
Participants are not required to pay for shares of Common Stock awarded
under the Restricted Stock Award Plan. The participant may not sell, transfer,
pledge or otherwise attempt to convey any interest in the shares subject to the
award while the participant is an employee of the Company or a subsidiary of the
Company. The Committee may modify or remove, in whole or in part, the risk of
forfeiture and/or the prohibition against transfer for any participant whose
employment terminates within 90 days before or after any such decision to modify
or remove any such restrictions. The Committee may, in its sole discretion and
on terms and conditions it shall determine consistent with Rule 16b-3 approve or
disapprove the election of a participant for the Company to withhold shares of
Common Stock as the deemed cash settlement to satisfy the Company's withholding
tax obligations relating to the removal of restrictions with respect to shares
awarded under the Restricted Stock Award Plan. During the period the shares are
subject to forfeiture, the participant is entitled to receive dividends and
other distributions on the shares and is entitled to vote such shares on all
matters submitted to the shareholders of the Company. The Restricted Stock Award
Plan will terminate when all of the shares authorized for award thereunder have
been issued and are no longer subject to forfeiture unless terminated earlier by
the Board of Directors or the Committee. Stock awards to recipients also
include, unless otherwise determined by the Committee, cash awards to reimburse
recipients for a significant portion of any federal, state and local income
taxes incurred by them in connection with the vesting of the stock award, not to
exceed 100% of the fair market value of the award on the date the restrictions
lapse or are removed.
Shares granted under the Restricted Stock Award Plan may be subject to
restrictions on resale not contained in the plan. Shares awarded will not have
been registered for resale under the Securities Act of 1933, as amended (the
"1933 Act"), and may be resold only pursuant to a registration statement filed
by the Company, which the Company is not obligated to do, or an exemption from
registration. Securities and Exchange Commission Rule 144 is a safe harbor rule
that sets forth certain requirements that would allow the shares to be resold
without registration. The requirements include a holding period of two years
from the date of the award and, in some cases, a filing with the Securities and
Exchange Commission, as well as certain other requirements. In addition, persons
subject to Section 16 of the 1934 Act will be required to hold the shares for a
period of at least six months from the date of the award.
Amendment of the Restricted Stock Award Plan
The Board of Directors of the Company or the Committee may amend,
suspend or terminate the Restricted Stock Award Plan at any time without the
approval of the shareholders of the Company. Nevertheless, no such amendment,
suspension or termination will affect previously granted awards without the
participants' consent unless the Committee determines that change is in the best
interests of all participants who have received awards.
Federal Income Tax Consequences
Under present federal income tax regulations, generally, absent an
election by the participant, there will be no federal income tax consequences to
either the Company or a participant upon the grant of a restricted stock award.
A participant will recognize income, for federal income tax purposes, at the
time that the restrictions with respect to any portion of an award are removed,
in an amount equal to the fair market value of the shares that are
unconditionally vested on that date, plus the amount of any such award. That
income generally will be taxable at ordinary income rates. The Company generally
is entitled to a federal income tax deduction with respect to the amount equal
to the amount of ordinary income recognized by the participant as a result of
the removal of the restrictions and payment of the cash award. The Company may
claim this deduction in its tax year ending with or immediately after the end of
the participant's tax year in which the participant recognized such income. To
avoid taxation at the time restricted stock becomes nonforfeitable, as described
above, a holder of restricted stock may elect to recognize ordinary income for
the taxable year in which the award of restricted stock is made, in an amount
equal to the fair market value of all shares of restricted stock awarded to such
grantee (even if the shares are subject to forfeiture). For purposes of this
election, fair market value will be determined as of the date the award of
restricted stock is made.
The Committee, subject to approval of the Restricted Stock Award Plan
by the shareholders of the Company, has awarded Joel Dupre, Chairman of the
Board and Chief Executive Officer of the Company, 100,000 shares of Common Stock
under the Restricted Stock Award Plan. Under the terms of the Award to Mr.
Dupre, such shares will vest over a five-year period commencing on the fifth
anniversary of the date of grant. Subject to the terms of the Plan regarding
early vesting, restrictions will lapse on 20,000 shares on each of the fifth,
sixth, seventh, eighth and ninth anniversaries of the date of grant.
Vote Required
The Restricted Stock Award Plan will be effective only upon approval by
the holders of a majority of the outstanding shares of Common Stock.
The Board of Directors recommends a vote for the approval of the
Restricted Stock Award Plan.
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth, for the fiscal years indicated, all
compensation awarded to, earned by or paid to the chief executive officer
("CEO") of the Company (Mr. Joel Dupre, the Chairman of the Board and Chief
Executive Officer of the Company since March 20, 1995; Mr. Yutaka Yamaguchi, the
Chairman of the Board and Chief Executive Officer of the Company prior to March
20, 1995). For the three fiscal years ended November 30, 1995, no other
executive officer of the Company had a salary and bonus which exceeded $100,000.
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
----------------------------------- -------------
Other Annual
Name and Compensation Options All Other
Principal Position Year Salary($) Bonus($) ($) (#) Compensation($)
- ------------------ ---- --------- -------- ------------ ------- ---------------
Joel Dupre (1) 1995 $170,000 None None None None
Chairman of the 1994 170,000 $47,776 None None None
Board and Chief 1993 170,000 None None None None
Executive Officer
Yutaka Yamaguchi (2) 1995 None None None None None
Former Chairman 1994 None None None None None
of the Board and 1993 $50,000 None None None None
Chief Executive
Officer
- ------------------
(1) Mr. Dupre held the title of Executive Vice President of the Company during
the fiscal year ended November 30, 1994. On March 29, 1995, in connection
with the transactions contemplated by the Stock Purchase Agreement and the
Asset Purchase Agreement (See "Change in Control of Company"), Mr. Dupre
was elected Chairman of the Board and Chief Executive Officer of the
Company.
(2) Mr. Yamaguchi resigned as an officer and director of the Company effective
January 1, 1995.
During the fiscal year ended November 30, 1995, neither of the
executive officers named in the Summary Compensation Table were granted any
options, nor did they exercise any options, under the 1995 Stock Option Plan of
the Company. At November 30, 1995, neither of the executive officers named in
the Summary Compensation Table held any option to purchase shares of Common
Stock. At July 15, 1996, Mr. Dupre held options to purchase 40,000 shares of
Common Stock at a price of $2.75 per share, 25% of which options are first
exercisable on each of February 2, 1997, 1998, 1999 and 2000 and all of which
options expire on February 2, 2001.
As described above under "Change in Control of the Company," the
Company entered into a Severance Agreement dated as of March 20, 1995 with Mr.
Yamaguchi pursuant to which the Company paid to Mr. Yamaguchi $100,000 plus
interest at the rate of 10% per annum on March 31, 1996 and will pay to Mr.
Yamaguchi $100,000 plus interest at the rate of 10% per annum on March 31, 1997.
Board of Directors Compensation
The Company does not currently compensate directors for service on the
Board of Directors.
Employee Retirement Plan
In June 1995, the Board of Directors of the Company determined to
discontinue benefit accruals under the Company's tax-qualified Employee
Retirement Plan (the "Retirement Plan"). Pursuant to action taken by the Board
of Directors at such time, benefits ceased to accrue for all active participants
under the Retirement Plan on June 30, 1995. The Retirement Plan is administered
by the Board of Directors.
Each of the Company's United States-based employees was eligible to
participate in the Retirement Plan. However, effective as of July 1, 1995 and in
connection with the Board's action, the Retirement Plan was amended to provide
that no additional eligible employees may participate in the Retirement Plan and
accrue benefits thereunder. The following table discloses estimated annual
benefits payable upon retirement in specified compensation and years of service
classifications.
Projected Benefit at Retirement
Years of Service
------------------------------------------------------------------------
15 20 25 30 35
------- ------- ------- -------- ---------
Salary(1)
--------
$ 20,000 $ 3,750 $ 5,000 $ 6,250 $ 7,500 $ 8,750
25,000 4,625 6,250 7,313 9,375 10,938
30,000 5,625 7,500 9,375 11,250 13,125
35,000 6,563 8,750 10,938 13,125 15,313
40,000 7,500 10,000 12,500 15,000 17,500
50,000 9,980 12,604 15,625 18,750 21,875
75,000 17,105 22,104 26,948 31,986 37,249
100,000 24,730 31,604 38,873 46,236 53,874
125,000 31,355 41,104 50,698 60,406 70,499
150,000 (2) 38,480 50,004 62,573 74,736 87,124
175,000 45,605 60,104 74,448 88,986 103,749
200,000 52,730 69,604 86,323 103,236 120,374 (3)
- ------------
(1) The annual benefits shown in the Table are integrated with Social
Security benefits and there are no other offsets to benefits.
(2) In general, Section 401(a)(17) of the Internal Revenue Code provides
that for 1994, compensation used for computing benefits under a
tax-qualified employee pension plan cannot exceed $150,000 (as
adjusted).
(3) Under current law, the maximum annual benefit payable under the
Retirement Plan cannot exceed $120,000 (as adjusted).
The Retirement Plan is funded by the Company on an actuarial basis, and
the Company contributes annually the minimum amount required to cover the normal
cost for current service and to fund supplemental costs, if any, from the date
each supplemental cost was incurred. Contributions were intended to provide for
benefits attributed to service to date, and also for those expected to vest in
the future. Based on the assumptions used in the actuarial valuation, the
Retirement Plan is fully funded.
The estimated credited years of service for each of the executive
officers named in the Summary Compensation Table is as follows: Joel Dupre (11
years) and Yutaka Yamaguchi (none). $150,000 of Mr. Dupre's compensation shown
in the Summary Compensation Table was used to compute his projected benefit
under the Retirement Plan.
Benefits are computed on the basis of a straight-life annuity. Benefits
under the Retirement Plan are integrated with Social Security benefits.
The Retirement Plan will continue to comply with the applicable
sections of the Internal Revenue Code, the Employee Retirement Income Security
Act, and applicable Internal Revenue Services rules and regulations. In
accordance with the terms of the Retirement Plan, distributions will continue to
be made to retired and terminated employees who are participants in the
Retirement Plan.
Comparison of Five-Year Cumulative Total Return
The graph set forth below compares the cumulative total shareholder
return on the Common Stock for the period commencing December 1, 1990 and ending
November 30, 1995 against the cumulative total return on the NASDAQ Stock Market
Index and a peer group comprised of those public companies whose business
activities fall within the same standard industrial classification code as the
Company and whose stock has been publicly traded for at least five years. This
graph assumes a $100 investment in the Common Stock and in each index on
December 1, 1990 and that all dividends paid by companies included in each index
were reinvested.
COMPANY 1990 1991 1992 1993 1994 1995
------- ---- ---- ---- ---- ---- ----
Sirco International Corp. 100 78.57 78.57 92.86 89.29 64.29
Industry Index 100 353.00 144.96 165.80 163.01 255.17
NASDAQ Stock Market Index 100 122.19 131.24 156.22 168.24 213.31
Report on Executive Compensation
The Board of Directors determines the compensation of the CEO and sets
policies for and reviews with the CEO the compensation awarded to the other
principal executives. The Company's executive officers consist of the CEO and
Mr. Eric Smith.
Salaries. Base salaries for the Company's executive officers are
determined initially by evaluating the responsibilities of the position held and
the experience of the individual, and by reference to the competitive
marketplace for management talent, including a comparison of base salaries for
comparable positions at comparable companies within the Company's industry.
Several of such companies are in the Company's Peer Group as described above
under - "Comparison of Five-Year Cumulative Total Return." The Company believes
that its salaries are below average as compared to its competitors. Annual
salary adjustments are determined by evaluating the competitive marketplace, the
performance of the Company, the performance of the executive particularly with
respect to the ability to manage growth of the Company, the length of the
executive's service to the Company and any increased responsibilities assumed by
the executive.
Compensation of Chief Executive Officer. The CEO is a principal
shareholder of the Company and beneficially owns and controls approximately
52.0% of the outstanding shares of Common Stock of the Company. See "Common
Stock Owned by Directors, Officers and Other Beneficial Owners." The Board
believes he is substantially motivated, both by reason of his stock ownership
and his commitment to the Company, to act on behalf of all shareholders to
optimize overall corporate performance. Accordingly, the Board has not
considered it necessary to specifically relate the CEO's compensation to
corporate performance. The Company had an employment agreement with Mr. Dupre
that set his base salary though November 30, 1995. Mr. Dupre received $47,776 in
other compensation during fiscal 1994, which amount was based upon the
performance of the division of the Company that was managed by Mr. Dupre during
that period.
Board of Directors Interlocks and Insider Participation in
Compensation Decisions
The following members of the Board of Directors were officers of the
Company or a subsidiary of the Company during the fiscal year ended November 30,
1995: Joel Dupre, Eric Smith and Douglas Turner. In addition, Yutaka Yamaguchi
and Takeshi Yamaguchi were members of the Board of Directors and executive
officers of the Company for a period of time during the fiscal year ended
November 30, 1995. All of such directors and officers (including Messrs. Yutaka
Yamaguchi and Takeshi Yamaguchi) participated in deliberations of the Company's
Board of Directors concerning executive officer compensation.
Certain Relationships and Related Transactions
Joseph Takada, the beneficial owner of approximately 10.18% of the
outstanding shares of Common Stock, is the Managing Director of Ideal Pacific
Ltd, the Company's manufacturing agent in Hong Kong ("Ideal"). During the fiscal
year ended November 30, 1995, the Company paid aggregate commissions of
approximately $315,000 to Ideal. Mr. Wang, the beneficial owner of approximately
6.79% of the outstanding shares of Common Stock, is the Managing Director of
Kao-Lien Industrial Co., Ltd., the Company's manufacturing agent in Taiwan
("Kao-Lien"). During the fiscal year ended November 30, 1995, the Company paid
aggregate commissions of approximately $287,000 to Kao-Lien. Albert Cheng, the
beneficial owner of 3.39% of the outstanding shares of Common Stock, is the
President of Constellation Enterprise Co., Ltd. ("Constellation"). During the
fiscal year ended November 30, 1995, the Company purchased approximately
$193,000 of luggage and backpack products from Constellation.
Eric M. Hellige, a director of the Company, is a member of Pryor,
Cashman, Sherman & Flynn, counsel to the Company ("Pryor, Cashman"). Fees paid
by the Company to Pryor, Cashman for legal services rendered during the fiscal
year ended November 30, 1995 did not exceed 5% of such firm's or the Company's
revenues.
Neil Grundman, a former director of the Company, is a member of Olshan,
Grundman, Frome & Rosenzweig, former counsel to the Company ("Olshan"). Fees
paid by the Company to Olshan for legal services rendered during the fiscal year
ended November 30, 1995 did not exceed 5% of such firm's or the Company's
revenues.
Yashiro has made available to the Company a line of credit for
financing trade letters of credit. At November 30, 1995, the Company owed
Yashiro approximately $536,000, which amount related to letter-of-credit
financings bearing interest at prime plus 2% per annum. Amounts borrowed under
the line of credit with Yashiro are repayable within 100 days after the delivery
of the related goods. The Company paid Yashiro interest of approximately
$122,000 during the fiscal year ended November 30, 1995. In addition to
interest, Yashiro is paid a handling fee of 3% of the cost of the goods. Such
handling fees amounted to approximately $245,000 during the fiscal year ended
November 30, 1995. The Company is current in its obligations to Yashiro.
In 1993, the Company entered into a revolving bank credit agreement for
up to $2,000,000 with Shinhan Bank (the "Shinhan Facility"). The Shinhan
Facility expired on July 31, 1995, at which time all amounts became due and
payable and were paid in full. The Shinhan Facility provided for the issuance of
letters of credit in favor of the Company's foreign suppliers for the purchase
of inventory, with interest payable monthly at prime plus 1%. Borrowings under
the facility were repayable to Shinhan Bank within 180 days of shipment of the
goods. Repayment of amounts due under the facility were secured by the personal
guaranty of the Company's former Chairman, Mr. Yutaka Yamaguchi, and the
Company's $500,000 certificate of deposit held by the bank as collateral. Mr.
Yutaka Yamaguchi did not directly receive any compensation from the Company
during the fiscal year ended November 30, 1995; however, Yashiro was paid a fee
of $50,000 for all services provided to the Company by Mr. Yutaka Yamaguchi.
For the fiscal year ended November 30, 1995, the Company also purchased
in the ordinary course of business, $734,000 of handbags and accessories
(representing approximately 6% of total purchases by the Company for such year)
from Lucci. At the time of such purchases, 45% of Lucci was owned by the same
individuals that owned Yashiro Co. Ltd. and Yashiro, including Yutaka Yamaguchi.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Ernst & Young, New York, New York ("E&Y"),
served as the Company's independent public accountants for the fiscal year ended
November 30, 1994. Such firm has no other relationship to the Company or its
affiliates. Effective April 3, 1995, the Company dismissed E&Y and retained the
independent accounting firm of Nussbaum Yates & Wolpow, P.C. ("Nussbaum"), which
appointment applied for the audit for the Company's fiscal year ending November
30, 1995. Neither during the audit of the Company's two most recent fiscal years
nor during any subsequent interim period have there been any disagreements with
E&Y or Nussbaum on any matter of accounting principles or practices, financial
statements disclosure or auditing scope or procedure. Neither E&Y's nor
Nussbaum's report on the Company's financial statements for the last two fiscal
years contained any adverse opinion, disclaimer of opinion or qualification of
any type. The decision to change the Company's independent accountants was
approved by the Company's Board of Directors.
A representative of Nussbaum is expected to attend the Annual Meeting,
and such representative will have the opportunity to make a statement if he so
desires and will be available to respond to appropriate questions from
shareholders. No representative of E&Y is expected to attend the Annual Meeting.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended for presentation at the 1997 Annual
Meeting of Shareholders and intended to be included in the Company's Proxy
Statement and form of proxy relating to that meeting must be received at the
offices of the Company by March __, 1997.
OTHER BUSINESS
Other than as described above, the Board of Directors knows of no
matters to be presented at the Annual Meeting, but it is intended that the
persons named in the proxy will vote your shares according to their best
judgment if any matters not included in this Proxy Statement do properly come
before the meeting or any adjournment thereof.
ANNUAL REPORT
The Company's Annual Report on Form 10-K for the year ended November
30, 1995, as amended, including financial statements, is being mailed herewith.
If, for any reason you do not receive your copy of the Report, please contact
Mr. Gandolfo Verra, Secretary, Sirco International Corp., 24 Richmond Hill
Avenue, Stamford, Connecticut 06901, and another will be sent to you.
By Order of the Board of Directors,
Joel Dupre,
Chairman of the Board
Dated: August __, 1996
Stamford, Connecticut
EXHIBIT A
SIRCO INTERNATIONAL CORP.
1996 Restricted Stock Award Plan
Section 1. Purpose
The purposes of the 1996 Restricted Stock Award Plan of Sirco
International Corp. (the "Plan") is to advance the interest of Sirco
International Corp. (the "Company") and its Affiliates (as defined in Section 4
hereof), by encouraging and enabling the acquisition of a financial interest in
the Company by officers (including non-employee officers) and other key
employees through grants of restricted shares of Company Common Stock (the
"Awards" or singly, an "Award") and through reimbursement by the Company of
amounts payable by such persons as a consequence of any such Award (the "Cash
Amount"). In addition, the Plan is intended to aid the Company and its
Affiliates in attracting and retaining officers (including non-employee
officers) and key employees, to stimulate the efforts of such participants and
to strengthen their desire to remain in the service of the Company and its
Affiliates.
Section 2. Administration
The Plan shall be administered by a committee (the "Committee")
appointed by the Board of Directors of the Company (the "Board") from among its
members and shall be comprised of not less than two members of the Board. Unless
and until its members are not qualified to serve on the Committee pursuant to
the provisions of the Plan, the Stock Option Committee of the Board shall
function as the Committee. Members of the Committee shall be members of the
Board who are not eligible to participate under the Plan and who have not been
granted or awarded equity securities of the Company for at least one year prior
to the time they become members of the Committee, or any other "plan" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934 which permits
discretionary equity-based awards to directors. The Committee shall determine
the officers (including non-employee officers) and key employees of the Company
and its Affiliates (including officers, whether or not they are directors) to
whom, and the time or times at which Awards will be granted, the number of
shares to be awarded, the time or times within which the Awards may be subject
to or release from forfeiture, the cancellation of the Award (with the consent
of the holder thereof), and all other conditions of the Award. The provisions
and conditions of the Awards need not be the same with respect to each
recipient.
The Committee may, subject to the provisions of the Plan, establish
such rules and regulations as it deems necessary or advisable for the proper
administration of the Plan and may make determinations and may take such other
action in connection with or in relation to the Plan as it deems necessary or
advisable. Each determination or other action made or taken pursuant to the
Plan, including interpretation of the Plan and the specific terms and conditions
of the Awards granted hereunder by the Committee, shall be final and conclusive
for all purposes and upon all persons, including but without limitation, the
Company and its Affiliates, the Committee, the Board, and the affected
participants and/or their respective successors in interest.
In addition to such other rights of indemnifications as they have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against expenses (including, without limitation,
reasonable attorneys' fees) actually and necessarily incurred in connection with
the defense of any action, suit or proceedings, or in connection with any
appeal, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Award
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved to the extent required by and in the
manner provided by the Certificate of Incorporation or Bylaws of the Company
relating to indemnification of directors) or paid by them in satisfaction of a
judgment in any such action, suit or proceedings, except in relation to matters
as to which it shall be adjudged in such action, suit or proceedings that such
Committee member or members did not act in good faith and in a manner he, she or
they reasonably believed to be in or not opposed to the best interest of the
Company.
Section 3. Stock
The stock to be issued under the Plan pursuant to the Awards shall be
shares of Common Stock, par value $.10 per share, of the Company (the "Stock").
The Stock shall be made available from authorized and unissued Common Stock of
the Company or from shares of Stock held by the Company in its treasury. The
total number of shares of Stock that may be issued pursuant to the Awards under
the Plan may not exceed 200,000 shares. Such number of shares shall be subject
to adjustment in accordance with Section 8.
Section 4. Eligibility
Awards may be granted to officers (including non-employee officers and
key employees of the Company and its Affiliates. The term "Affiliate" shall mean
any corporation or other business organization in which the Company owns,
directly or indirectly, 100% of the voting stock or capital at the time of the
granting of such Award. No participant shall acquire, pursuant to the Awards
granted under the Plan, more than 100,000 shares of Stock.
Section 5. Awards
The Committee shall grant Awards hereunder in accordance with the terms
and conditions set forth in an agreement between the Company or its Affiliate
and the recipient (a "Stock Agreement"). Each Stock Agreement shall contain such
individual and corporate performance goals, restrictions, terms and conditions
as the Committee may require. Except as otherwise specifically provided in the
Stock Agreement relating to an Award, Awards shall be subject to the following
terms and conditions:
(a) The Stock subject to an Award shall be forfeited to the
Company if the employment of the employee by the Company or an
Affiliate terminates for any reason (including, but not limited to,
termination by the Company, with or without cause) other than death,
retirement or disability.
(b) If the participant retires:
---- Any Award shall be forfeited to the Company if the
recipient's retirement occurs within four years after
the date of the Award;
---- Two-thirds of the shares which are included in an
Award shall be forfeited to the Company if the
recipient's retirement occurs within five years after
the date of the Award;
---- One-third of the shares which are included in an
Award shall be forfeited to the Company if the
recipient's retirement occurs within six years after
the date of the Award;
---- If the recipient retires at any time more than six
years after the date of an Award, such recipient
shall be entitled to retain the total number of
shares subject to the Award.
(c) If at any time the recipient dies or becomes disabled,
such recipient or such recipient's estate shall be entitled to retain
the total number of shares subject to the Award.
(d) Within 60 days after the date of death, disability or
retirement, as described in subsections (a) and (b) of this Section 5,
or within 60 days after the restrictions on the Awards are removed by
the Committee, as described in Section 11, the Company shall pay to the
recipient of an Award, or the recipient's estate, an amount, net of any
amounts required by law to be withheld with respect to the Award, equal
to the Cash Amount, such Cash Amount not to exceed the federal, state
and local taxes the recipient must pay as a result of the fair market
value of the Award being including in income for federal, state and
local income tax purposes.
For purposes of this subsection 5(d), the fair market value of an
Award shall be the average of the high and low market prices at which a
share of Stock shall have been sold on the date of death, disability,
retirement, or other such date restrictions may be removed at the
direction of the Committee, or if such date is not a trading day, on
the next proceeding trading day, as reported on the NASDAQ National
Market or NASDAQ Small Cap listing or as otherwise determined by the
Committee. For purposes of this Section, the Cash Amount shall not
exceed 100% of the Fair Market Value of the Award as determined in this
Section.
(e) Awards may contain such other provisions, not inconsistent
with the provisions of the Plan and as set forth in the related Stock
Agreement, as the Committee shall determine appropriate from time to
time, including the removal of all forfeiture provisions contained in
this Section and the nontransferability provisions of Section 6, based
upon performance standards established by the Committee at the time of
the Award.
Section 6. Nontransferability of Awards
Shares of Stock subject to Awards shall not be transferable and shall
not be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed
of while the recipient is an officer or employee of the Company or an Affiliate
unless specifically authorized by the Committee and set forth in the related
Stock Agreement.
Section 7. Rights as a Shareholder
A recipient who receives an Award shall have rights as a shareholder
with respect to Stock covered by such Award to receive dividends in cash or
other property or other distributions or rights in respect to such Stock and to
vote such Stock as the record owner thereof, except to the extent that such
rights as a shareholder would cause the Plan not to comply with Rule 16b-3 under
the Securities Exchange Act of 1934.
Section 8. Adjustment in the Number of Shares Awarded
In the event there is any change in the Stock through the declaration
of stock dividends, through stock splits or through recapitalization or merger,
share exchange, consolidation, combination of shares or otherwise, the Committee
or the Board shall make such adjustment, if any, as it may deem appropriate in
the number of shares of Stock subject to an Award or thereafter available for
Awards and in the maximum number of shares that may be awarded to any employee.
The determination of the Committee as to these matters shall be conclusive.
Section 9. Taxes
(a) If any officer or employee properly elects within 30 days of the
date on which an Award is granted to include in gross income for federal income
tax purposes an amount equal to the fair market value (on the date of grant of
the Award) of the Stock subject to the Award, such person shall make
arrangements satisfactory to the Committee to pay to the Company in the year of
such Award any federal, state or local taxes required to be withheld with
respect to such shares. If such person shall fail to make such tax payments as
are required, the Company and its Affiliates shall, to the extent permitted by
law, have the right to deduct from any payment of any kind otherwise due to the
officer or employee any federal, state or local income taxes of any kind
required by law to be withheld with respect to the Stock subject to such Award.
(b) Each officer or employee who does not make the election described
in paragraph (a) of this Section, shall no later than the date as of which the
restrictions referred to in Section 5 and such other restrictions as may have
been imposed as a condition of the Award shall lapse, pay to the Company, or
make arrangements satisfactory to the Committee regarding payment of, any
federal, state or local taxes of any kind required by law to be withheld with
respect to the Stock subject to such Award, and the Company and its Affiliates
shall, to the extent permitted by law, have the right to deduct from any payment
of any kind otherwise due to the officer or employee any federal, state or local
taxes of any kind required by law to be withheld with respect to the Stock
subject to such Award. The Committee may, in its sole discretion and on terms it
shall determine, approve or disapprove the election of an officer or employee
for the Company to withhold shares of Stock as the deemed cash settlement to
satisfy the Company's withholding tax obligations, in whole or in part, relating
to the Award. The approval or disapproval of the Committee may be given at any
time after the election to which it relates. The election by any participant
shall only be made during the period beginning on the third business day
following the date of release for publication of quarterly or annual summary
statements of sales and earnings and ending on the twelfth business day
following such date.
Section 10. Restrictive Legend and Stock Power
Each certificate evidencing Stock subject to an Award shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Award. Any attempt to dispose of Stock in contravention of
such terms, conditions and restrictions shall be ineffective. The Committee may
adopt rules which provide that the certificates evidencing such shares may be
held in custody by a bank or other institution, or that the Company may itself
hold such shares in custody until the restrictions thereon shall have lapsed and
may require as a condition of any Award that the recipient shall have delivered
a stock power endorsed in blank relating to the Stock covered by such Award.
Section 11. Amendments, Modification and Termination of the Plan
The Board or the Committee may terminate the Plan, in whole or in part,
may suspend the Plan, in whole or in part from time to time, and may amend the
Plan from time to time, including the adoption of amendments deemed necessary or
desirable to qualify the Awards under the laws of various states (including tax
laws) and under rules and regulations promulgated by the Securities and Exchange
Commission with respect to employees who are subject to the provisions of
Section 16 of the Securities Exchange Act of 1934, or to correct any defect or
supply an omission or reconcile any inconsistency in the Plan or in any Award
granted thereunder, without the approval of the shareholders of the Company;
provided, however, that no action shall be taken without the approval of the
shareholders of the Company to increase materially the number of shares of Stock
that may be awarded hereunder, increase materially the benefits accruing to
participants under the Plan, change materially the requirements as to
eligibility to participant in the Plan, withdraw administration from the
Committee, or permit any person while a member of the Committee to be eligible
to receive or hold an Award granted under the Plan. No amendment or termination
or modification of the Plan shall in any manner affect Awards theretofore
granted without the consent of the recipient unless the Committee has made a
determination that an amendment or modification is in the best interest of all
persons to whom Awards have theretofore been granted. The restrictions contained
in Sections 5(a) and 6 hereof may be modified or removed, in whole or in part,
by the Board or the Committee with respect to a previously granted Award made to
a person whose employment by the Company or an Affiliate terminates within 90
days before or after the date on which the Board or Committee determines to
modify or remove any such restrictions. The Plan shall terminate when all shares
of Stock subject to Awards under the Plan have been issued and are no longer
subject to forfeiture under the terms hereof unless earlier terminated by the
Board or the Committee.
Section 12. Governing Law
The Plan and all determinations made and actions taken pursuant thereto
shall be governed by the laws of the State of New York and construed in
accordance therewith.
Section 13. Right to Terminate Employment
The Plan shall not impose any obligation on the Company or any
Affiliate to continue the employment of any employee selected to participate in
the Plan. The Plan does not impose any obligation on the part of any participant
in the Plan to remain in the employ of the Company or any Affiliate.
Section 14. Savings Provisions
Any action taken by the Committee or the Board pursuant to the Plan,
and any provision of the Plan, is null and void if it does not comply with the
requirements of Rule 16b-3 under the Securities Exchange Act of 1934 and would
otherwise result in liability under Section 16(b) of that Act.
PROXY SIRCO INTERNATIONAL CORP. PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Joel Dupre and Gandolfo Verra, or any
of them, lawful attorneys and proxies of the undersigned with full power of
substitution, for and in the name, place and stead of the undersigned to attend
the Annual Meeting of Shareholders of Sirco International Corp. to be held at
366 Fifth Avenue, New York, New York on Wednesday, September 25, 1996 at 10:00
a.m., local time, and any adjournment(s) or postponement(s) thereof, with all
powers the undersigned would possess if personally present and to vote the
number of votes the undersigned would be entitled to vote if personally present.
The Board of Directors recommends a vote "FOR" the proposals set forth below.
PROPOSAL 1: The Election of Directors: Joel Dupre, Eric M. Hellige, Ian
Mitchell, Paul Riss, Eric Smith and Douglas Turner.
FOR all nominees WITHHOLD
Instructions: To withhold authority to
vote for any individual nominee, write
that nominee's name here:
[ ] [ ] ________________________________________
PROPOSAL 2: Proposal to amend the Company's 1995 Stock Option Plan to increase
the number of shares of Common Stock from 200,000 to 400,000 shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(Continued and to be SIGNED ON THE OTHER SIDE)
PROPOSAL 3: Proposal to adopt the 1996 Restricted Stock Award Plan of the
Company.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
In accordance with their discretion, said Attorneys and Proxies are authorized
to vote upon such other matters or proposals not known at the time of
solicitation of this proxy which may properly come before the meeting.
This proxy when properly executed will be voted in the manner describe herein by
the undersigned shareholder. If no direction is made, this proxy will be voted
for each of the Proposals set forth herein. Any prior proxy is hereby revoked.
Dated: _______________________________________ 1996
____________________________________________________
Signature
____________________________________________________
(Signature if held jointly)
Please sign exactly as your name appears at the left. When shares are held by
joint tenats, both should sign. When signing as attorney, executor,
administrator, trustee or corporation, please sign in full corporate name by
president or other authorized person. If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. THANK YOU.