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)
SIRCO INTERNATIONAL CORP.
24 Richmond Hill Avenue
Stamford, Connecticut 06901
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 11, 1998
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 Thursday, June 11, 1998 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 amend the Company's Certificate of Incorporation to increase the
number of authorized shares of Common Stock from 10,000,000 shares
to 20,000,000 shares; and
3. 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 May 4, 1998
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.
Sincerely,
/s/Joel Dupre
-------------
JOEL DUPRE
Chairman of the Board and
Chief Executive Officer
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 Thursday, June
11, 1998 at 10:00 A.M., New York City time, at the Company's offices located at
366 Fifth Avenue, Suite 205, 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 May 11, 1998, accompanied by the Company's Annual Report on
Form 10-K for the fiscal year ended November 30, 1997, 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 1999
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
Certificate of Incorporation to increase the number of authorized
shares of Common Stock, par value $.10 per share (the "Common
Stock"), from 10,000,000 shares to 20,000,000 shares; and
(3) 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 proposal 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 proposal 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, the
approval of the holders of a majority of the outstanding shares of Common Stock
is required to approve the proposed amendment to the Company's Certificate of
Incorporation and a majority of the votes cast by the shareholders entitled to
vote at the meeting is required to take any other action. 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 Monday, May 4, 1998 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.
Common Stock Owned by Directors, Officers and Other Beneficial Owners
The following table sets forth, as of May 1, 1998, 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 Beneficially Percent of Outstanding
Name and Address Owned Common Stock
- ---------------- ----- ------------
Joel Dupre(1) 1,486,000 30.0%
c/o Sirco International Corp.
24 Richmond Hill Avenue
Stamford, Connecticut 06901
CLEC Holding Corp. 350,000 7.1%
4205 Vineland Road
Suite L-15
Orlando, Florida 32811
Pacific Million Enterprise Ltd.(2)(3) 266,666 5.4%
The Gateway, Tower 2, Suite 1807
25 Canton Road
Tsimshatsui, Kowloon, Hong Kong
Joseph Takada(2)(3) 266,666 5.4%
c/o Pacific Million Enterprise Ltd.
The Gateway, Tower 2, Suite 1807
25 Canton Road
Tsimshatsui, Kowloon, Hong Kong
Cheng-Sen Wang(2) 177,778 3.6%
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) 88,888 1.8%
c/o Constellation Enterprises Co., Ltd.
199 Chung Ching North Road
11th Floor, Section 3
Taipei, Taiwan R.O.C.
Paul Riss(5) 75,000 1.5%
Eric M. Hellige(6) 25,000 *
Barrie Sommerfield (7) 20,200 *
Richard Pyles 20,000 *
Eric Smith 20,000 *
All directors and executive
officers of the Company as a
group (six individuals) 1,646,200 33.3%
- ------------------
* less than 1%.
(1) Includes 120,000 shares of Common Stock subject to options which are
presently exercisable and 533,332 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 266,666, 117,778 and 88,888 shares, respectively, held of record
by them. Includes 25,000 shares for which Mr. Dupre has granted to Mr.
Hellige a stock purchase option.
(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 1,486,000 shares
of Common Stock.
(3) Pacific has granted to Mr. Dupre an option to purchase all of the 266,666
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 88,888
shares he owns of record.
(5) Includes 70,000 shares of Common Stock subject to options that are
presently exercisable.
(6) Consists of 25,000 shares of Common Stock subject to an option granted by
Mr. Dupre that is presently exercisable.
(7) Consists of 20,000 shares of Common Stock subject to options that are
presently exercisable.
ELECTION OF DIRECTORS (Proxy Item 1)
The Amended and Restated Bylaws of the Company provide that the number
of directors of the Company shall be at least three, except that where all the
shares are owned beneficially and of record by fewer than three shareholders,
the number of directors may be less than three but not less than the number of
shareholders. Subject to the foregoing limitation, such number may be fixed from
time to time by action of the Board of Directors or of the shareholders, or, if
the number of directors is not so fixed, the number shall be five. In April
1998, the Board of Directors fixed the number of directors at six. 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, with
the exception of Mr. Scalice.
Principal Occupation for Past Five Years and
Name Age Current Public Directorships or Trusteeships
- ---- --- --------------------------------------------
Joel Dupre 44 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 43 Director since 1995 and Secretary of the Company; Partner for more than five
years of Pryor Cashman Sherman & Flynn LLP, counsel to the Company.
Paul H. Riss 42 Director since 1995 and Chief Financial Officer and Treasurer of the Company
since November 1996; Chief Financial Officer of Sequins International Inc., a
manufacturer of sequined fabrics and trimmings, from June 1992 to November 1996.
Anthony M. Scalice 60 Vice President of the Company, and President and Chief Executive Officer of Essex
Communications, Inc., a wholly-owned subsidiary of the Company, since February
1998; President of Pinnacle Telephone Consultants, Inc., a telecommunications
consulting firm specializing in the private payphone industry, from June 1997 to
February 1998; President of Crescent Public Communications, Inc., a private
payphone sales and servicing company, from May 1995 to May 1997; Owner and
President of Pinnacle Telecommunications Consultants, Inc., a telecommunications
consulting firm specializing in the private payphone industry from July 1991 to
May 1995; Director of the Independent Payphone Association of New York (IPANY), a
non-profit payphone association, from June 1996 to the present.
Eric Smith 53 Director since 1988; Vice President - General Manager of West Coast Distribution
Center of the Company since 1983.
Barrie Sommerfield 68 Director since 1997; Vice Chairman of Gore, Sommerfield, Ditnes International,
Inc., a consultant for trademark licenses, for more than five years.
Board Meetings and Committees; Management Matters
The Board of Directors held seven meetings during the fiscal year ended
November 30, 1997. Each director attended at least 75% of the Board and
Committee meetings of which he was a member during such time as he served as a
director. 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, 1997 and currently consists of Eric M.
Hellige and Barrie Sommerfield. The Stock Option Committee has exclusive
authority to grant options to the Company's executive officers under the 1995
Stock Option Plan. In October 1997, the Board of Directors established an Audit
Committee, which did not meet during the fiscal year ended November 30, 1997.
The Audit Committee currently consists of Eric M. Hellige, Paul H. Riss and
Barrie Sommerfield. The Board of Directors does not have standing 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.
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) and all other executive officers of the Company who received more than
$100,000 in compensation during fiscal 1997 (collectively referred to as the
"Named Executives"):
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Awards
-------------------------- -------------------------
Other Annual
Name and Compensation Options All Other
Principal Position Year Salary($) Bonus($) ($) (#)(5) Compensation
- ------------------ ---- --------- -------- --- ------ ------------
Joel Dupre (1) 1997 $240,000 None None 80,000 None
Chairman of the 1996 216,667 None None 80,000 None
Board and Chief 1995 170,000 None None None None
Executive Officer
Yutaka Yamaguchi (2) 1997 None None None None None
Former Chairman of 1996 None None None None None
the Board and Chief 1995 None None None None None
Executive Officer
Richard Pyles (3) 1997 100,000 None None 5,000 None
Senior Vice President 1996 98,341 $6,000 None 135,000 None
1995 95,025 None None 20,000 None
Paul H. Riss (4) 1997 125,000 None None 20,000 None
Chief Financial Officer 1996 12,354 None None 70,000 None
1995 None None None None None
- --------------
(1) Mr. Dupre held the title of Executive Vice President of the Company during
the fiscal year ended November 30, 1994. In March 1995, Mr. Dupre was
elected Chairman of the Board and Chief Executive Officer of the Company.
(2) Mr. Yamaguchi resigned as an officer and director of the Company effective
January 1, 1995.
(3) Mr. Pyles was elected Senior Vice President in November 1996. At all other
times, Mr. Pyles served as Vice President - Marketing and Sales of the
Company.
(4) Mr. Riss has been Chief Financial Officer of the Company since November
1996.
(5) Options have been adjusted to reflect a two-for-one stock split in May
1997.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth individual grants of stock options and
stock appreciation rights ("SARs") made by the Company during fiscal 1997 to
each of the Named Executives.
Percent Potential Realizable
Of Total Value at Assumed
Number of Options/SARs Annual Rates of Stock
Securities Granted to Price Appreciation
Underlying Employees Exercise or For Option Term (3)
Options/SARs in Fiscal Base Price Expiration
Name Granted(1) Year(2) ($/Share) Date 5% ($) 10% ($)
---- ---------- ------- --------- ---- ------ -------
Joel Dupre 80,000(4) 57.1% $2.13 02/24/02 $47,078 $104,031
Yutaka Yamaguchi -- -- -- -- -- --
Richard Pyles 5,000(4) 3.6 1.94 02/24/02 2,700 5,900
Paul H. Riss 20,000(4) 14.3 1.94 02/24/02 10,800 23,600
All Other Employees 35,000(4) 25.0 1.94 02/24/02 21,600 47,200
- ------------------
(1) Options have been adjusted to reflect a two-for-one stock split in May
1997. No SARs were granted by the Company in fiscal 1997.
(2) In fiscal 1997, the Company granted options to purchase an aggregate of
140,000 shares of Common Stock to six employees.
(3) The amounts shown in these two columns represent the potential realizable
values using the options granted and the exercise price. The assumed rates
of stock price appreciation are set by the Commission's executive
compensation disclosure rules and are not intended to forecast the future
appreciation of the Company's Common Stock.
(4) Options became exercisable on the first anniversary date of the option
grant date of February 24, 1997.
Stock Option Exercises
The following table contains information relating to the exercise of the
Company's stock options by the Named Executives in fiscal 1997, as well as the
number and value of their unexercised options as of November 30, 1997.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at In-the-Money Options
Acquired on Value Fiscal Year-End(#)(1) at Fiscal Year End($)(2)
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------
Joel Dupre -- -- 20,000 140,000 $37,500 $217,500
Yutaka Yamaguchi -- -- -- -- -- --
Richard Pyles 20,000 $46,666 15,000 5,000 28,125 6,563
Paul H. Riss 5,000 25,000 50,000 55,000 97,188 89,688
- -----------------
(1) The sum of the numbers under the Exercisable and Unexercisable column of
this heading represents each Named Executive's total outstanding options to
purchase shares of Common Stock.
(2) The dollar amounts shown under the Exercisable and Unexercisable columns of
the heading represent the number of exercisable and unexercisable Company
options, respectively, which were "In-the-Money" on November 30, 1997,
multiplied by the difference between the closing price of the Common Stock
on November 30, 1997, which was $3.25 per share, and the exercise price of
the Company options. For purposes of these calculations, In-the-Money
options are those with an exercise price below $3.25 per share.
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
classification.
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 (12
years), Yutaka Yamaguchi (none), Richard Pyles (3 years) and Paul H. Riss
(none). The frozen accrued monthly benefit for Mr. Dupre and Mr. Pyles is $1,678
and $239, respectively. $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, 1992 and ending
November 30, 1997 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, 1992 and that all dividends paid by companies included in each index
were reinvested.
[GRAPHIC-GRAPH PLOTTED TO POINTS LISTED BELOW]
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
FISCAL YEAR ENDING
-------------------------------------------------
COMPANY 1992 1993 1994 1995 1996 1997
SIRCO INTERNAT CORP 100 118.18 113.64 81.82 131.82 236.36
INDUSTRY INDEX 100 114.38 112.45 176.03 196.50 143.38
BROAD MARKET 100 119.03 128.19 162.53 201.65 250.48
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, Eric
Smith, Paul H. Riss and Richard Pyles.
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
30.0% 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.
Board of Directors Interlocks and Insider Participation in Compensation
Decisions
The following former and present members of the Board of Directors were
officers of the Company or a subsidiary of the Company during the fiscal year
ended November 30, 1997: Joel Dupre, Eric Smith, Eric M. Hellige and Paul H.
Riss. Such members participated in deliberations of the Company's Board of
Directors concerning executive officer compensation during the fiscal year ended
November 30, 1997.
Certain Relationships and Related Transactions
Mr. Joseph Takada, the beneficial owner of approximately 5.4% of the
outstanding shares of Common Stock, is the Managing Director of Ideal Pacific
Ltd. ("Ideal"), the Company's manufacturing agent in Hong Kong. During the
fiscal year ended November 30, 1997, the Company paid aggregate commissions of
approximately $40,000 to Ideal. Mr. Cheng-Sen Wang, the beneficial owner of
approximately 3.6% of the outstanding shares of Common Stock, is the Managing
Director of Kao-Lien Industrial Co., Ltd. ("Kao-Lien"), the Company's
manufacturing agent in Taiwan. During the fiscal year ended November 30, 1997,
the Company paid aggregate commissions of approximately $168,000 to Kao-Lien.
Mr. Albert Cheng, the beneficial owner of 1.8% of the outstanding shares of
Common Stock, is the President of Constellation Enterprise Co., Ltd.
("Constellation"). During the fiscal year ended November 30, 1997, the Company
purchased approximately $891,000 of luggage and backpack products from
Constellation.
At November 30, 1997, the Company owed Ideal, Kao-Lien and
Constellation approximately $305,000, $141,000 and $528,000, respectively.
Paul H. Riss, a director and the Chief Financial Officer of the
Company, is a member of the Board of Directors of CLEC Holding Corp. ("CHC"), an
affiliate of the Company that owns 95% of the capital stock of The Other Phone
Company, Inc., an integrated telecommunications provider based in Florida. Mr.
Riss owns options to purchase 100,000 shares of common stock of CHC. The
Company's Chairman and Chief Executive Officer, Joel Dupre, owns 306,000 shares
of common stock of CHC, or approximately 2.7% of the outstanding shares, and
owns options to purchase an additional 150,000 shares.
Eric M. Hellige, a director of the Company, is a member of Pryor
Cashman Sherman & Flynn LLP, 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, 1997 did not exceed 5% of such firm's or the Company's
revenues. Mr. Hellige owns 25,000 shares of common stock of CHC, an affiliate of
the Company.
Barrie Sommerfield, a director of the Company, is the Vice Chairman of
Gore, Sommerfield, Ditnes International, Inc. ("Gore, Sommerfield"), a firm that
provides consulting services to the Company with regard to the licensing of
trademarked names. The Company paid fees to Gore, Sommerfield in fiscal 1997 of
approximately $4,000.
The Company believes that all purchases from or transactions with
affiliated parties were on terms and at prices substantially similar to those
available from unaffiliated third parties.
PROPOSAL TO INCREASE AUTHORIZED
SHARES OF COMMON STOCK
(Proxy Item 2)
Proposed Amendment
The Company's Board of Directors has proposed an amendment to Article
FOURTH of the Company's Certificate of Incorporation. This amendment would
increase the Company's authorized Common Stock from 10,000,000 shares to
20,000,000 shares. On May 1, 1998, 4,950,400 shares of the Company's Common
Stock were outstanding and an aggregate of 858,500 shares of Common Stock were
reserved for issuance under the Company's 1995 Stock Option Plan and the
Company's 1996 Restricted Stock Award Plan. Approval of the proposed increase
would give the Company approximately 14,200,000 shares of Common Stock for
future issuance.
The Company also has 1,000,000 authorized shares of preferred stock,
par value $.10 per share (the "Preferred Stock"), none of which was outstanding
at May 1, 1998. No increase in the authorized number of shares of Preferred
Stock is requested.
The Company has no specific plans for the issuance of additional shares
of Common Stock. However, the Board of Directors believes that the proposed
increase is desirable so that, as the need may arise, the Company will have more
financial flexibility and be able to issue additional shares of Common Stock
without the expense and delay associated with a special shareholders' meeting,
except where shareholder approval is required by applicable law or stock
exchange regulations. The additional shares of Common Stock might be used, for
example, in connection with an expansion of the Company's business through
investments or acquisitions, sold in a financing transaction or issued under an
employee stock option, savings or other benefit plan or in a stock split or
dividend to shareholders. The Board does not intend to issue any shares except
on terms that it considers to be in the best interests of the Company and its
shareholders.
The additional shares of Common Stock for which authorization is sought
would be a part of the existing class of Common Stock. If and when issued, these
shares would have the same rights and privileges as the shares of Common Stock
presently outstanding. No holder of Common Stock has any preemptive rights to
acquire additional shares of the Common Stock.
The issuance of additional shares could reduce existing shareholders'
percentage ownership and voting power in the Company and, depending on the
transaction in which they are issued, could affect the per share book value or
other per share financial measures.
Although the proposed amendment is not intended to be an anti-takeover
measure, shareholders should note that, under certain circumstances, the
additional shares of Common Stock could be used to make any attempt to gain
control of the Company or the Board of Directors more difficult or
time-consuming. Any of the additional shares of Common Stock could be privately
placed with purchasers who might side with the Board in opposing a hostile
takeover bid. It is possible that such shares could be sold with or without an
option, on the part of the Company, to repurchase such shares, or on the part of
the purchaser, to put such shares to the Company.
The amendment to increase the authorized Common Stock might be
considered to have the effect of discouraging an attempt by another person or
entity, through the acquisition of a substantial number of shares of the
Company's capital stock, to acquire control of the Company, since the issuance
of the additional shares of Common Stock could be used to dilute the stock
ownership of a person or entity seeking to obtain control and to increase the
cost to a person or entity seeking to acquire a majority of the voting power of
the Company. If so used, the effect of the additional authorized shares of
Common Stock might be (i) to deprive shareholders of an opportunity to sell
their stock at a temporarily higher price as a result of a tender offer or the
purchase of shares by a person or entity seeking to obtain control of the
Company or (ii) to assist incumbent management in retaining its present
position.
Text of Proposed Amendment
The first paragraph of Article FOURTH of the Company's Certificate of
Incorporation is proposed to be amended to read as follows:
"FOURTH: A. Authorized Shares. The total number of
shares of all classes of stock which the Company shall have
the authority to issue is twenty-one million (21,000,000), of
which twenty million (20,000,000) shall be common stock, par
value $.10 per share, and one million (1,000,000) shall be
preferred stock, par value $.10 per share."
Vote Required for Approval
For this amendment to be approved, a majority of the holders of all
outstanding shares entitled to vote must vote for approval.
The Company's Board of Directors recommends that the shareholders vote
FOR adoption of the proposed amendment to the Company's Certificate of
Incorporation.
INDEPENDENT PUBLIC ACCOUNTANTS
Nussbaum Yates & Wolpow, P.C. ("Nussbaum"), served as the Company's
independent public accountants for the fiscal year ended November 30, 1997. 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.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended for presentation at the 1999 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 January 11, 1999.
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, 1997, including financial statements, is being mailed herewith. If, for any
reason you do not receive your copy of the Report, please contact Mr. Paul H.
Riss, Chief Financial Officer, Sirco International Corp., 24 Richmond Hill
Avenue, Stamford, Connecticut 06901, and another will be sent to you.
By Order of the Board of Directors,
/S/JOEL DUPRE
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JOEL DUPRE,
Chairman of the Board and
Chief Executive Officer
Dated: May 11, 1998
Stamford, Connecticut
REVOCABLE PROXY
SIRCO INTERNATIONAL CORP.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Joel Dupre and Paul H. Riss, 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 Thursday, June 11, 1998 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, Eric Smith, Paul H. Riss, Anthony M. Scalice,
Eric Smith and Barrie Sommerfield.
[ ] FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
PROPOSAL 2. Proposal to amend the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock from 10,000,000 to
20,000,000 shares.
[ ] 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 described
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.
Please be sure to sign and date
this Proxy in the box below.
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Date
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Shareholder sign above
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Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
SIRCO INTERNATIONAL CORP.
Please sign exactly as your name appears on this proxy card. When shares are
held by joint tenants, 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 ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY