<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
ENSEC INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
[LETTERHEAD OF ENSEC APPEARS HERE]
May 6, 1997
Dear Fellow Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
of Ensec International, Inc., scheduled for 10:00 a.m., Tuesday, May 20, 1997,
at the Embassy Suites Hotel, 661 Northwest 53rd Street, Boca Raton, Florida
33487.
Your Board of Directors encourages the vote of every shareholder.
Whether or not you plan to be present at the annual meeting, it would be most
helpful if you would execute the enclosed Proxy Card and return it as soon as
possible, but in any event, before the date of the Annual Meeting. A postage-
paid envelope is enclosed for your convenience.
Sincerely,
/s/ Charles N. Finkel
Charles N. Finkel
Chairman of the Board,
President and Chief Executive Officer
<PAGE>
ENSEC INTERNATIONAL, INC.
751 PARK OF COMMERCE DRIVE, SUITE 104
BOCA RATON, FLORIDA 33487
___________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 20, 1997
___________
NOTICE IS HEREBY GIVEN that the annual meeting of the Shareholders of
Ensec International, Inc., a Florida corporation (the "Company"), will be held
at the Embassy Suites Hotel, 661 Northwest 53rd Street, Boca Raton, Florida
33487, on Tuesday, May 20, 1997 at 10:00 a.m., Eastern Standard Time, for the
following purposes :
1. To elect two (2) Class I Directors to hold office for a term of
three (3) years and until their successors have been elected and
qualified; and
2. To act upon such other matters as may properly come before the
meeting or any postponements or adjournments thereof.
Only shareholders of record at the close of business on April 22, 1997
shall be entitled to notice of, and to vote at, the meeting or any postponements
or adjournments thereof.
By Order of the Board of Directors
/s/ David J. Rottner
DAVID J. ROTTNER
Secretary
Boca Raton, Florida
May 6, 1997
<PAGE>
ENSEC INTERNATIONAL, INC.
751 PARK OF COMMERCE DRIVE, SUITE 104
BOCA RATON, FLORIDA 33487
-------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 20, 1997
---------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors and management of Ensec International, Inc., a Florida
corporation (the "Company"), of proxies for use at the Annual Meeting of
Shareholders (the "1997 Annual Meeting") to be held at the Embassy Suites Hotel,
661 Northwest 53rd Street, Boca Raton, Florida 33487 on Tuesday, May 20, 1997,
at 10:00 a.m., Eastern Standard Time, or at any and all postponements or
adjournments thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting.
This Proxy Statement, Notice of Annual Meeting and accompanying proxy
card are first being mailed to shareholders on or about May 6, 1997.
Only shareholders of record at the close of business on April 22, 1997,
will be entitled to notice of the 1997 Annual Meeting and to vote the shares of
common stock of the Company, par value $.01 per share ("Common Stock"), held by
them on such date at the 1997 Annual Meeting or any and all postponements or
adjournments thereof. As of April 22, 1997, 5,656,250 shares of Common Stock
were issued and outstanding and entitled to vote at the 1997 Annual Meeting.
Each share of Common Stock entitles the holder thereof to cast one vote
on each matter to be voted upon at the 1997 Annual Meeting. A majority of the
shares of Common Stock issued and outstanding will constitute a quorum at the
meeting. Abstentions and broker non-votes are counted only for purposes of
determining the presence or absence of a quorum for the transaction of business
and are not counted for purposes of electing directors in accordance with
Proposal One. None of the actions to be voted upon at the 1997 Annual Meeting
shall create dissenters' rights under the Florida Business Corporation Act.
If the accompanying proxy card is properly signed and returned to the
Company and not revoked, it will be voted in accordance with the instructions
contained therein. Unless contrary instructions are given, the persons
designated as proxy holders in the accompanying proxy card will vote FOR the
election of the Board of Directors' nominees as directors and as recommended by
the Board of Directors with regard to all other matters as may properly come
before the 1997 Annual Meeting or, if no such recommendation is given, in their
own discretion. Each such proxy granted may be revoked by the shareholder giving
such proxy at any time before it is exercised by filing with the Secretary of
the Company a revoking instrument or a duly executed proxy bearing a later date.
The powers of the proxy holders will be suspended if the person executing the
proxy attends the 1997 Annual Meeting in person and so requests. Attendance at
the 1997 Annual Meeting will not, in itself, constitute revocation of the proxy.
The cost of soliciting proxies in the form enclosed herewith will be
borne by the Company. In addition to the solicitation of proxies by mail, the
Company, through its directors, officers, employees and agents, may also solicit
proxies personally or by telephone. Only independent third party agents not
otherwise affiliated with the Company will be specifically compensated for such
solicitation activities. The Company will also request persons, firms and
corporations holding shares in their names or in the names of their nominees,
which are beneficially owned by others, to send proxy material to and obtain
proxies from such beneficial owners and will reimburse such holders for their
reasonable expenses in doing so.
<PAGE>
The presence at the 1997 Annual Meeting, in person or by proxy, of a
majority of the shares of Common Stock outstanding as of April 22, 1997, will
constitute a quorum.
PRINCIPAL SHAREHOLDERS AND BENEFICIAL OWNERSHIP OF MANAGEMENT
The following table sets forth information with respect to the shares of
Common Stock beneficially owned as of April 22, 1997 by (i) those persons who
were beneficial owners of more than 5% of the Company's outstanding shares of
Common Stock (as obtained from reports regarding such ownership filed by such
persons with the Securities and Exchange Commission (the "Commission")), (ii)
each of the Company's directors and certain of its executive officers, and (iii)
all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Name and Address Amount and Nature
of Beneficial Owner(1) of Beneficial Owner Percent of Class
- ---------------------- ------------------- ----------------
<S> <C> <C>
Charles N. Finkel........................... 3,433,333 1/3(2) 60.61%(2)
Flavio R. da Silva.......................... 16,666 2/3(3) .29%(3)
Steven T. Geffin............................ 16,666 2/3(3) .29%(3)
James K. Norman............................. 50,000(4) .88%(4)
Raymond E. List............................. 5,000(5) .09%(5)
83 Lynwood Place
Moraga, California 94556
Terence R. McAuliffe........................ 5,000(5) .09%(5)
816 Connecticut Avenue, N.W., 11th Floor
Washington, D.C. 20006
All directors and executive
officers as a group (7 persons)........... 3,536,666 2/3(2-6) 61.32%(2-6)
- -------------
</TABLE>
(1) Unless otherwise indicated, the address of each shareholder is 751 Park of
Commerce Drive, Suite 104, Boca Raton, Florida 33487. Unless otherwise
indicated, the Company believes that all persons named in the table have
sole voting and investment power with respect to all shares of Common Stock
beneficially owned by them. A person is deemed to be the beneficial owner
of securities that can be acquired by such person within 60 days of April
22, 1997 upon the exercise of options, warrants or convertible securities
and the table above reflects shares of Common Stock which may be acquired
upon the exercise of options granted under the Plan that have already
vested or will vest within 60 days of April 22, 1997.
(2) Includes (i) 8,3331/3 shares of Common Stock which may be acquired upon the
exercise of options granted under the Company's 1996 Stock Option Plan (the
"Plan") which have already vested (the "Option Shares") and (ii) 3,425,000
shares that are indirectly owned by Mr. Finkel through wholly-owned
entities.
(3) Consists of 16,6662/3 of the Option Shares.
(4) Consists of 50,000 of the Option Shares.
(5) Consists of 5,000 Option Shares which may be acquired upon the exercise of
options granted as Director Awards under the Plan.
(6) Includes 10,000 of the Option Shares which may be acquired by an executive
officer of the Company not named in the table set forth above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, executive officers and any persons who
beneficially own ten percent or more of the Company's Common Stock to file with
the Commission initial reports of beneficial ownership and reports of changes in
beneficial
2
<PAGE>
ownership of Common Stock. Such persons are required by regulations of the
Commission to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely upon (i) a review of Forms 3 and 4 and amendments thereto
furnished to the Company during fiscal year 1996 and Form 5 and amendments
thereto furnished to the Company with respect to fiscal year 1996, and (ii)
written representations from such reporting persons that no Form 5 filings were
required with respect to such fiscal year, the Company believes that each filing
required to be made pursuant to Section 16(a) was made by each such reporting
person on a timely basis.
PROPOSAL ONE
ELECTION OF DIRECTORS
The following table sets forth information with respect to the
continuing directors, director nominees and executive officers of the Company
and certain executive officers of its wholly-owned subsidiaries Ensec Engenharia
e Sistemas de Seguranca, S.A. ("Ensec, S.A."), a Brazilian corporation, and
Ensec Inc. ("Ensec Inc."), a Florida corporation.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Charles N. Finkel 47 Chairman of the Board (Class III Director), Chief Executive Officer and President of the Company;
Chairman of the Board and Chief Executive Officer of Ensec, S.A. and Ensec Inc.
James K. Norman 50 Vice President-U.S. and Class I Director of the Company; President, Chief Operating Officer and
Director of Ensec Inc.; Director of Ensec, S.A.
Flavio R. da Silva 48 Vice President-Brazil and Class II Director of the Company; President, Chief Operating Officer and
Director of Ensec, S.A.; Director of Ensec Inc.
Steven T. Geffin 39 Vice President-Technology and Engineering of the Company; Vice President and Director of Ensec,
S.A. and Ensec Inc.
David J. Rottner 41 Vice President, Chief Financial Officer and Secretary of the Company and Ensec Inc.
Edward Morelli 46 Vice President-Operations of Ensec Inc.
Nuno J. Moura 50 Vice President, Secretary and Controller of Ensec, S.A.
John De George 49 Vice President-Sales of Ensec Inc.
Terence R. McAuliffe 40 Class I Director of the Company
Raymond E. List 53 Class II Director of the Company
</TABLE>
The Board of Directors is currently comprised of five members. Pursuant
to the Company's Amended Articles of Incorporation, the Board of Directors is
divided into three classes, as nearly equal in number as possible, designated
Class I, Class II and Class III. If elected, Messrs. McAuliffe and Norman, who
currently serve as Class I directors, will continue to serve in such capacity
until the 2000 Annual Meeting of
3
<PAGE>
Shareholders. Messrs. da Silva and List currently serve as Class II directors
until the 1998 Annual Meeting of Shareholders and Mr. Finkel currently serves as
a Class III director until the 1999 Annual Meeting of Shareholders. At each
annual meeting of shareholders, successors to the class of directors whose term
expires at that annual meeting shall be elected for a three-year term. There are
no family relationships among any of the directors of the Company.
Messrs. McAuliffe and Norman have consented to serve on the Board and
the Board has no reason to believe that they will not serve if elected, but if
either of them should become unavailable to serve as a director, and if the
Board shall have designated a substitute nominee or nominees, the persons named
as proxies will vote for the substitute nominee or nominees designated by the
Board.
Messrs. McAuliffe and Norman must be elected by a plurality of the votes
cast at the 1997 Annual Meeting.
NOMINEES AS CLASS I DIRECTORS
The biographies set forth below provide information with respect to each
of Messrs. McAuliffe and Norman as director nominees.
TERENCE R. MCAULIFFE, ESQ. joined the Company's Board of Directors as a
Class I director in October 1996. Mr. McAuliffe is the Chairman of American
Heritage Corporation, a premier builder of single-family homes in Central
Florida. He also serves as Chairman and Chief Executive Officer of Jefferson
National Title Insurance Company and as Chairman of American Marketing Services,
Inc. Mr. McAuliffe serves on the Board of Directors of Beacon Energies, Made in
the USA Shopping Network, Inc. and The Center for National Policy. Mr. McAuliffe
formerly served as Vice Chairman of Federal Capital Bank, N.A. and as Chairman
of Federal City National Bank. Mr. McAuliffe also served as Co-Chairman of the
Clinton-Gore Committee '96. Mr. McAuliffe received a Bachelor of Arts degree
from Catholic University of America, Washington, D.C. and a Juris Doctor degree
from Georgetown University, Washington, D.C.
JAMES K. NORMAN joined the Company in June 1996 as a Class I director
and the Company's Vice President-U.S. Since that time, Mr. Norman has also
served as the President, Chief Operating Officer and a director of Ensec Inc.
and a director of Ensec, S.A. Prior to joining the Company, Mr. Norman was
employed for 20 years by Racal-Milgo, Inc. and affiliated companies, serving
from 1989 to 1995 as President of Racal-Datacom, Inc., a data communications
company with revenues of approximately $300 million in 1995. Prior to that time,
Mr. Norman served as Senior Vice President-Sales, Service and Marketing of
Racal-Milgo, Inc., with worldwide responsibility for sales and service for all
products designed and manufactured in the United States. Mr. Norman received a
Bachelor of Science degree in Business Administration from Auburn University in
Auburn, Alabama.
CONTINUING CLASS II DIRECTORS
FLAVIO R. DA SILVA joined Ensec, S.A. in December 1995 as a director and
its President and Chief Operating Officer and has served as a Class II director
and Vice President-Brazil of the Company since April 1996. Mr. da Silva has also
served as a director of Ensec Inc. since June 1996. Prior to joining the Company
in 1995, Mr. da Silva held management positions, from 1971 to 1989, for Brasilit
S.A., a manufacturer of building products, and from 1990 to 1995, for Fortilit
S.A. and predecessor companies, a manufacturer of PVC products. Mr. da Silva
received Bachelor of Science and Masters degrees in Business Administration from
Mackenzie University, Brazil, and a Ph.D. in Engineering from the University of
Sao Paulo, Brazil.
RAYMOND E. LIST joined the Company's Board of Directors as a Class II
director in October 1996. Mr. List is a Managing General Partner in Fairfax
Partners, a venture capital partnership with investments in health care,
software and environmental companies. From 1988 to 1994, Mr. List served as
President and
4
<PAGE>
Chairman of ICF Kaiser Engineers, Inc., a worldwide engineering and construction
company. Mr. List received a Bachelor of Civil Engineering degree from Union
College in Schenectady, New York, a Masters degree in Engineering from Manhattan
College, Bronx, New York and a Masters degree in Business Administration from
Harvard University in Cambridge, Massachusetts.
CONTINUING CLASS III DIRECTOR
CHARLES N. FINKEL founded Ensec, S.A. in 1983 and has been Chairman of
the Board (serving as a Class III director), Chief Executive Officer and
President of the Company since its inception in April 1996. Mr. Finkel is also
Chairman of the Board and Chief Executive Officer of Ensec, S.A. and Ensec Inc.
Mr. Finkel has 18 years of experience in the security industry commencing with
Engesa, S.A., an armaments company based in Sao Paulo, Brazil, where Mr. Finkel
was director of export sales. In 1983, Mr. Finkel left Engesa to found Ensec,
S.A. Mr. Finkel received a degree in civil engineering from Armando Alvares
Peteado, Brazil, and a Masters degree in Marketing from Getulio Vargas, Brazil.
EXECUTIVE OFFICERS
Certain information relating to each executive officer of the Company
and certain executive officers of Ensec Inc. and Ensec, S.A. (other than those
set forth above) is set forth below.
STEVEN T. GEFFIN joined the Company in 1992 and has served as its Vice
President-Technology and Engineering since April 1996. Prior to joining the
Company, Mr. Geffin was employed in the research and development department for
two years at Casi-Rusco, a competitor of the Company engaged in the sales and
installation of security systems. Mr. Geffin is responsible for engineering,
research and development and manufacturing for all Company products. Mr. Geffin
received Bachelor of Science and Masters of Science degrees in Electrical
Engineering from the University of Miami in Miami, Florida.
DAVID J. ROTTNER joined the Company in May 1996 as its Chief Financial
Officer, Vice President and Secretary, and was appointed Chief Financial
Officer, Vice President and Secretary of Ensec Inc. in June 1996. Mr. Rottner
has over 17 years of public accounting experience. From November 1993 to May
1996, Mr. Rottner was a certified public accountant with Grant Thornton LLP, a
national accounting firm, in Fort Lauderdale, Florida. From April 1990 to
November 1993, Mr. Rottner was a certified public accountant with Paul Scherer &
Company, in New York, New York. Mr. Rottner received a Bachelor of Science
degree in Accounting from the State University of New York, Albany.
EDWARD MORELLI joined Ensec Inc. in 1994 and was appointed as its Vice
President-Operations in June 1996. From 1990 to 1994, Mr. Morelli was Operations
Manager for Datalarm Security Systems, a security and card access company in
Miami, Florida. Prior to that, he was Division Administrator for Sentrex
Security Systems, also a security and card access company, in Miami. Mr.
Morelli's career in security systems began in 1974 installing fire and burglar
alarms. Mr. Morelli studied electronics at PIO IX in Buenos Aires, Argentina.
NUNO J. MOURA joined Ensec, S.A. in 1995. From 1993 to 1995, Mr. Moura
worked for Cadi Ltda. in Brazil as a personnel recruiter and administrator. From
1990 to 1993, he served as the controller for Brasinca, S.A., a producer,
assembler and supplier of automotive parts. Mr. Moura received a Masters degree
in Finance from Pontificia Universidade Catolica, Brazil.
JOHN DE GEORGE joined Ensec Inc. in 1995 as a U.S. Sales Manager and was
appointed as its Vice President-Sales in June 1996. From 1992 to 1995, Mr. De
George was sales manager for Vikonics, Inc., a manufacturer of large scale
computer-based integrated security and life safety systems in Teterboro, New
Jersey. Prior to that, he was General Manager for Alphamation, Inc., a
data/telecommunication and
5
<PAGE>
document/image processing systems integrator located in Hauppauge, New York. Mr.
De George received a Bachelor of Science degree from Hofstra University in
Hempstead, New York.
BOARD OF DIRECTORS COMPENSATION; MEETINGS; COMMITTEES
Compensation
In fiscal year 1996, the Company did not pay a director's fee or other
similar compensation to any director of the Company for his service as such. The
Company does not intend to compensate non-employee directors for serving as
directors of the Company, except to reimburse them for their reasonable expenses
incurred in connection with such service and to issue grants of Director Awards
(as defined below) under the Plan. See "--1996 Stock Option Plan." Directors who
are also employees of the Company do not receive additional compensation for
serving as a director.
In October 1996, the Company granted to each of Messrs. List and
McAuliffe a Director Award to purchase 15,000 shares of Common Stock at an
exercise price of $6.34 per share, which represents the fair market value of the
Common Stock on the date of grant. The options under the Director Awards vest
automatically in one-third increments over a three-year period, commencing on
May 20, 1997, and continuing upon each of the Company's 1998 and 1999 annual
meetings of shareholders.
Meetings
The Board of Directors of the Company held one meeting during fiscal
year 1996. Each incumbent director attended this meeting. No committee meetings
were held in fiscal year 1996.
Committees
The Board of Directors has an Audit Committee and a Compensation
Committee. The Board does not have a standing Nominating Committee.
AUDIT COMMITTEE
In October 1996, the Board of Directors established the Company's Audit
Committee. The Audit Committee currently reviews the Corporation's policies and
procedures on maintaining its accounting records and the adequacy of its
internal controls and reviews and approves of all transactions between the
Company and any of its officers, directors or other affiliates. The current
members of the Audit Committee are Messrs. da Silva, Finkel and List. The Audit
Committee did not hold any meetings during fiscal 1996.
COMPENSATION COMMITTEE
In October 1996, the Board of Directors established the Company's
Compensation Committee in order to determine the cash and other compensation, if
any, to be paid to the Company's executive officers. However, the Board of
Directors, and not the Compensation Committee, shall be responsible for the
administration and granting of awards under the Plan. The current members of the
Compensation Committee are Messrs. Finkel, McAuliffe and Norman. The
Compensation Committee did not hold any meetings during fiscal 1996.
EXECUTIVE COMPENSATION
The following table sets forth as of December 31, 1996, all compensation
paid during the Company's last three fiscal years to the Company's Chief
Executive Officer and to executive officers whose total annual compensation
exceeded $100,000 during the last fiscal year.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation(1) Awards
------------------------------------------ ------------
Number of
Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary Bonus Compensation(2) Options(3) Compensation
- ------------------ ---- -------- -------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Charles N. Finkel, 1996 $216,112 $ -0- $10,246 25,000 $ 35,642(4)
President and Chief 1995 $116,500 $ -0- $ -0- -0- $107,200(5)
Executive Officer of the 1994 $ 73,000 $ -0- $ -0- -0- $117,900(6)
Company, and Chief
Executive Officer of
Ensec, S.A. and Ensec
Inc.
Flavio R. da Silva, 1996 $124,331 $ -0- $17,542 50,000 $ -0-
Vice President-Brazil of 1995 $ 9,112 $ -0- $ -0- -0- $ -0-
the Company and
President and Chief
Operating Officer of
Ensec, S.A. (7)
Steven T. Geffin, 1996 $ 92,836 $25,000 $ -0- 50,000 $ -0-
Vice President- 1995 $ 91,863 $ -0- $ -0- -0- $ -0-
Technology and 1994 $ 65,800 $ -0- $ -0- -0- $ -0-
Engineering of the
Company and Vice
President of Ensec Inc.
and Ensec, S.A.
</TABLE>
- --------------------
(1) In accordance with the rules of the Commission, the compensation described
in this table does not include medical group life insurance or other
benefits received by the named executive officers which are available
generally to all salaried employees of the Company, and certain perquisites
and other personal benefits, securities or property received by the
executives which do not exceed the lesser of $50,000 or 10% of any such
named executive officer's salary and bonus disclosed in this table.
(2) In accordance with their employment agreements, the Company paid to Messrs.
Finkel and da Silva a monthly automobile allowance and paid to Mr. da Silva
the amount of his medical premiums which exceed those provided under Ensec,
S.A.'s employee benefit plan. Additionally, the amounts in this column
include the value of additional employment-related benefits which accrued
to Messrs. Finkel and da Silva during fiscal 1996 under Brazilian law.
(3) The value of these options are detailed in the "Option Grants in Last
Fiscal Year" table below. All options were granted under the Plan.
(4) Represents the following compensation for expenses paid by the Company on
behalf of the named executive officer in fiscal year 1996: (i) $1,786 in
property maintenance expenses; (ii) $3,575 in car expenses; (iii) $5,381 in
meal expenses; (iv) $14,283 in travel expenses; (v) $5,700 in entertainment
expenses; and (vi) $4,917 in miscellaneous expenses.
(5) Represents the following compensation for expenses paid by the Company on
behalf of the named executive officer in fiscal year 1995: (i) $9,648 in
property maintenance expenses; (ii) $17,152 in car expenses; (iii) $18,224
in meal expenses; (iv) $26,800 in travel expenses; (v) $24,656 in
entertainment expenses; and (vi) $10,720 in miscellaneous expenses.
7
<PAGE>
(6) Represents the following compensation for expenses paid by the Company on
behalf of the named executive in fiscal year 1994: (i) $9,432 in property
maintenance expenses; (ii) $15,327 in car expenses; (iii) $21,222 in meal
expenses; (iv) $30,654 in travel expenses; (v) $23,580 in entertainment
expenses; and (vi) $17,685 in miscellaneous expenses.
(7) The table reflects compensation earned only in 1995 and 1996 as Mr. da
Silva was not employed by the Company at any time during 1994.
The following table sets forth information regarding options to purchase
the Company's Common Stock granted by the Company during 1996 to the executives
named in the Summary Compensation Table.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1996
Number of
Securities % of Total
Underlying Options Granted Per Share
Options To Employees in Exercise Expiration
Name Granted(1) 1996(2) Price Date
- ---------------------- ---------- --------------- ---------- ----------
<S> <C> <C> <C> <C>
Charles N. Finkel..... 25,000 7.0% $3.00 2006
Steven T. Geffin...... 50,000 14.1% $3.00 2006
Flavio R. da Silva.... 50,000 14.1% $3.00 2006
</TABLE>
- ----------------
(1) According to each named executive officer's option agreement, the options
shall vest in one-third equal installments over a two-year period. The
first vesting occurred on September 30, 1996 and subsequent vestings shall
occur on September 30, 1997 and September 30, 1998, provided that the named
executive officer is still employed by the Company as of each such date.
The option agreements provide for accelerated vesting in the event the
executive is terminated by the Company other than for cause, or in
connection with certain changes in control of the Company.
(2) Options to purchase a total of 355,000 shares were granted to employees of
the Company in fiscal year 1996 under the Plan. This aggregate amount does
not include options to purchase in the aggregate 30,000 shares of Common
Stock granted under the Plan in October 1996 to certain non-employee
directors of the Company and an option to purchase 15,000 shares of Common
Stock (not under the Plan) which was granted in October 1996 to an outside
consultant.
During 1996, no options were exercised by any of the three named executive
officers. The following table sets forth information with respect to such
executive officers concerning unexercised options held as of December 31, 1996.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN 1996 AND 1996 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-
Underlying Unexercised Options the-Money Options at
at December 31, 1996(1) December 31, 1996(2)
------------------------------ ------------------------------
Not Not
Name Exercisable Exercisable Exercisable Exercisable
- -------------------------- ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
Charles N. Finkel......... 8,333 1/3 16,666 2/3 $ 26,042 $ 52,083
Flavio R. da Silva........ 16,666 2/3 33,333 1/3 $ 52,083 $104,167
Steven T. Geffin.......... 16,666 2/3 33,333 1/3 $ 52,083 $104,167
</TABLE>
- --------------------------
(1) These options have an exercise price of $3.00 per share and are exercisable
during the period from 1996 to 2006.
(2) These values represent potential gains on both exercisable and
unexercisable options based on the closing price of the underlying Common
Stock as of December 31, 1996 less the exercise price of the options.
EMPLOYMENT AGREEMENTS
The Company or its subsidiaries are parties to substantially similar
employment agreements with Messrs. Finkel, Norman, da Silva, Geffin, Morelli,
Rottner and De George, pursuant to which each of these individuals serve as an
executive officer of the Company, Ensec, S.A. and/or Ensec Inc. Each of the
employment agreements is for an initial three-year term, which commenced in May
or June 1996 and will automatically renew for successive three-year terms unless
either party provides written notice to the other party at least 90 days prior
to renewal.
Pursuant to the employment agreements, Messrs. Finkel, Norman, da Silva,
Geffin, Morelli, Rottner and De George received an annual base salary for fiscal
year 1996 of $240,000, $127,000, $127,000, $100,000, $80,000, $75,000 and
$85,000, respectively, which may be increased from time to time by the Board of
Directors. Mr. Rottner's employment agreement provides for minimum annual
increases in base salary of at least 5%. Mr. De George's agreement provides for
payment of an additional 2% of sales revenues on sales of Company products by
Mr. De George until December 31, 1996. After such time, such sales commissions
shall terminate and shall be replaced by a sales incentive program to be
established by the Company. The employment agreements for Messrs. Norman, da
Silva and Geffin provide for annual cash bonuses equal to 25% of the annual base
salary then in effect for such individuals in the event that certain subsidiary
budgets are attained by the end of each fiscal year; however, Messrs. Norman and
da Silva voluntarily elected to waive their bonuses for fiscal year 1996. The
other executive officers will be eligible for annual cash bonuses as determined
in the discretion of the Board of Directors of the Company based upon their
attainment of individual performance targets and the financial performance of
the Company or its subsidiaries.
The agreements provide that upon the termination of employment by the
Company, other than for Cause (as defined in the agreements), the Company shall
pay (i) in the case of Mr. Finkel, an amount equal to the aggregate present
value of the product of (x) the average aggregate annual compensation subject to
U.S. income tax and paid to Mr. Finkel by the Company during the five calendar
years preceding the taxable year in which the date of termination occurs,
multiplied by (y) 2.99; (ii) in the case of Mr. Norman, one and one-half times
the amount of his total cash compensation received by him in the 12 months
preceding the date of termination; and (iii) in the case of Messrs. da Silva, De
George, Geffin, Morelli and Rottner, the amount
9
<PAGE>
of such executive officer's total cash compensation received by such executive
officer in the 12 months preceding the date of termination. The agreements
provide for noncompetition, nonsolicitation and nondisclosure covenants.
The agreements also provide for a grant of options under the Plan which
will vest in one-third equal installments over a two-year period. The first
vesting occurred as of September 30, 1996, and subsequent vestings will occur on
September 30, 1997 and September 30, 1998. Except for Mr. Finkel's options,
which are non-qualified stock options, the options granted are incentive stock
options (as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code")) and provide for an exercise price of $3.00 per share,
subject to adjustment in accordance with the terms of the Plan. In order for the
options to vest, the recipient of the options must be employed by the Company or
any of its subsidiaries as of the date of vesting. According to the terms of the
Plan and each option agreement, the vesting of options will be accelerated and
the all of the options will become immediately exercisable in the event the
recipient is terminated by the Company other than for Cause (as defined in the
employment agreement), or in the event of certain changes in control of the
Company.
1996 STOCK OPTION PLAN
The Company has adopted the Plan, pursuant to which stock options (both
Nonqualified Stock Options and Incentive Stock Options, as defined in the Plan),
stock appreciation rights, restricted stock, performance share awards and
phantom stock unit awards may be granted to directors and certain key employees
(the "Participants"). The Plan provides for the automatic grant (each, a
"Director Award") to directors who are not employees of the Company or its
subsidiaries, at such time as an individual becomes a director of the Company,
of Nonqualified Stock Options to purchase 15,000 shares of Common Stock at an
exercise price per share equal to the greater of $3.00 or the fair market value
of the shares on the date of grant. A Director Award vests in equal increments
of 5,000 shares per year, commencing upon the date of the Company's annual
meeting of shareholders for the election of directors next following the date
that such individual became a director and continuing with each such successive
annual meeting provided such person remains a director of the Company as of each
such date. The Plan also provides for the acceleration of the vesting schedule
of Director Awards in certain circumstances.
With respect to the grant of awards under the Plan to persons other than
non-employee directors, the Board of Directors will determine persons eligible
to be granted stock options, stock appreciation rights, performance share awards
and restricted stock, the amount of stock or rights to be optioned or granted to
each such person, and the terms and conditions of any such option, grant or
award. An Incentive Stock Option is intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code. Any Incentive Stock Option
granted under the Plan will have an exercise price of not less than 100% of the
fair market value of the shares on the date on which such option is granted.
With respect to an Incentive Stock Option granted to a Participant who owns more
than 10% of the total combined voting stock of the Company or any parent or
subsidiary of the Company, the exercise price for such option must be at least
110% of the fair market value of the shares subject to the option on the date
the option is granted. A Nonqualified Stock Option granted under the Plan (i.e.,
an option to purchase Common Stock that does not meet the Code's requirements
for Incentive Stock Options) must have an exercise price of at least the par
value of the stock.
Stock appreciation rights may be granted in conjunction with the grant
of an Incentive or Nonqualified Stock Option under the Plan or independently of
any such option. A stock appreciation right granted in conjunction with a stock
option may be an alternative right, in which event, the exercise of the stock
option terminates the stock appreciation right to the extent of the shares
purchased upon exercise of the stock option and, correspondingly, the exercise
of the stock appreciation right terminates the stock option to the extent of the
shares with respect to which such right is exercised. A stock appreciation
right, may not, however, be granted in conjunction with an Incentive Stock
Option under circumstances in which the exercise of the stock
10
<PAGE>
appreciation right affects the right to exercise the Incentive Stock Option or
vice versa, unless certain terms and conditions are met.
Subject to the terms of the Plan, the Board of Directors may award
shares of restricted stock to the Participants. Generally, a restricted stock
award will not require the payment of any option price by the Participant but
will call for the transfer of shares to the Participant subject to forfeiture,
without payment of any consideration by the Company, if the Participant's
employment terminates during a "restricted" period (which must be at least six
months) specified in the award of the restricted stock.
Performance shares may be awarded to participants based upon the degree
to which certain objective performance goals, as established by the Board of
Directors, are attained. The amount earned with respect to an award of
performance shares will usually be payable in stock based upon the fair market
value of such stock upon the valuation date. The Board of Directors, may,
however, vary the composition of a performance share award at its discretion.
The Company may also issue phantom stock unit awards to Participants
upon terms and conditions established by the Board of Directors from time to
time. A phantom stock unit entitles the holder of such unit to a hypothetical
equivalent of one share of stock granted in connection with a Plan award or
deferred performance share award. Phantom stock unit awards are nontransferable
and will be subject to forfeiture if employment of the Participant is terminated
before such awards become vesting in accordance with their terms.
There are 450,000 shares of Common Stock authorized for possible
issuance under the Plan. The Company has registered these shares pursuant to a
registration statement on Form S-8 filed with the Commission. As of December 31,
1996, options to purchase 385,000 of such reserved shares have been granted to
executive officers and non-employee directors of the Company.
SHAREHOLDER PROPOSALS
Shareholders who intend to submit proposals to the Company's
shareholders at the 1998 Annual Meeting of Shareholders must submit such
proposals to the Company no later than January 6, 1998, in order to be
considered for inclusion in the Proxy Statement and Proxy to be distributed by
the Board of Directors in connection with that meeting. Shareholder proposals
should be submitted to David J. Rottner, Secretary, Ensec International, Inc.,
751 Park of Commerce Drive, Suite 104, Boca Raton, Florida 33487.
OTHER MATTERS
The Board has no knowledge of any other matters which may come before
the meeting and does not intend to present any other matters. However, if any
other matters shall properly come before the meeting or any adjournment thereof,
the persons soliciting the proxies will have the discretion to vote on such
matters as they see fit.
If you do not plan to attend the meeting, in order that your shares may
be represented and in order to assure the required quorum, please sign, date and
return your proxy promptly. In the event you are able to attend the meeting, at
your request, the Company will cancel any proxy executed by you.
The Board of Directors has selected Grant Thornton LLP, the Company's
independent accountants for fiscal 1996, to serve as the Company's independent
accountants for fiscal 1997. Representatives of Grant Thornton LLP may or may
not be present at the 1997 Annual Meeting. If in attendance, such represenatives
may respond to appropriate questions and make such statements as they may
desire.
11
<PAGE>
FINANCIAL INFORMATION
Detailed financial information of the Company and its subsidiaries for
the fiscal year ended December 31, 1996 is included in the Company's 1996 Annual
Report on Form 10-KSB, as filed with the Commission on March 20, 1997, and as
amended by Form 10-KSB/A, anticipated to be filed with the Commission on May 6,
1997, copies of which (including exhibits thereto) are enclosed herewith.
REPORT TO SHAREHOLDERS
PURSUANT TO THE RULES OF THE COMMISSION, THE COMPANY HAS FURNISHED
HEREWITH TO EACH SHAREHOLDER A COPY OF THE COMPANY'S 1996 ANNUAL REPORT ON FORM
10-KSB, AS AMENDED BY FORM 10-KSB/A, IN EACH CASE AS FILED WITH THE COMMISSION,
INCLUDING EXHIBITS THERETO AND FINANCIAL STATEMENTS AND SCHEDULES THERETO, IN
LIEU OF AN ANNUAL REPORT TO SHAREHOLDERS.
By Order of the Board of Directors
/s/ David J. Rottner
DAVID J. ROTTNER
Secretary
May 6, 1997
12
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ENSEC INTERNATIONAL, INC.
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 20, 1997
The undersigned, a shareholder of Ensec International, Inc., a Florida
corporation (the "Company"), hereby appoints Charles N. Finkel and David J.
Rottner, or either of them, attorneys and proxies of the undersigned, with full
power of substitution, to vote and act for the undersigned at the 1997 Annual
Meeting of Shareholders of the Company to be held at the Embassy Suites Hotel,
661 Northwest 53rd Street, Boca Raton, Florida 33487, on Tuesday, May 20, 1997
at 10:00 a.m. local time and at any adjournments thereof, in respect of all
shares of the Common Stock of the Company registered in the name of the
undersigned as fully as the undersigned could vote and act if personally
present, on matters set forth on the reverse side of this proxy card.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE AS DIRECTED BY THE UNDERSIGNED.
HOWEVER, IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 AND,
WITH RESPECT TO ANY OTHER MATTER PROPERLY BROUGHT BEFORE THE MEETING OR ANY
ADJOURNMENTS THEREOF, IN ACCORDANCE WITH THE DETERMINATION OF THE PROXIES NAMED
HEREIN.
(CONTINUED AND TO BE SIGNED AND DATED ON OTHER SIDE)
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
ENSEC INTERNATIONAL, INC.
MAY 20, 1997
Please Detach and Mail in the Envelope Provided
- ------------------------------------------------------------------------------
[X] Please mark your
votes as in this
example.
VOTE FOR VOTE WITHHELD
all nominees listed at for all nominees
right except as marked listed at right as a
to the contrary group NOMINEES: Terence R. McAuliffe
[ ] [ ] James K. Norman
(1) ELECTION OF CLASS I DIRECTORS (2) IN THEIR DISCRETION, on any other
matters that may properly come
To elect as Class I directors to before the meeting or any
hold office for a term of three (3) adjournments thereof.
years and until their successors
have been elected and qualified. PLEASE COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THIS PROXY IN THE
To withhold authority to vote for ENCLOSED ENVELOPE WHICH REQUIRES NO
any individual nominee, print that POSTAGE IF MAILED IN THE UNITED STATES.
nominee's name on the line below.
- ----------------------------------
, 1997
- ------------------------------ ----------------------- -----------
Signature (L.S.) Signature (L.S.) Date
NOTE: Please date this proxy and sign your name exactly as your name appears
herein. If the stock is held jointly, only one owner must sign. When signing as
attorney, executor, administrator, trustee, guardian or in another
representative capacity, please give full title.
<PAGE>
[LETTERHEAD OF ENSEC INTERNATIONAL, INC. APPEARS HERE]
May 6, 1997
Dear Shareholders:
Enclosed please find a complete copy of Ensec International, Inc.'s
annual report on Form 10-KSB, which we filed with the Securities and Exchange
Commission on March 20, 1997, and an amendment to this report, which we
anticipate on filing with the Commission today, collectively representing our
annual report to you, our shareholders.
For Ensec, 1996 was a year of unprecedented change and forward progress.
In May 1996, Ensec completed a private placement of notes and warrants to
provide the building blocks for the consummation on September 30, 1996 of our
initial public offering. It was through this offering that Ensec established its
foundation as a publicly-traded company and began to pave the way toward a
successful future.
Ensec is on the verge of completing its redirection from a company with
operations and a customer base located primarily in Brazil to a company with
greater emphasis on sales in the United States and in other countries. While net
sales decreased approximately 9.3% from 1995 to 1996, sales of Ensec's
integrated security systems increased 6.9%. Furthermore, Ensec's sales of its
core integrated security systems showed future promise, as the gross profit
percentage from those sales in 1996 was 39.7%, compared to a gross profit
percentage of 31.9% in 1995. Although net losses for 1996 were approximately
$6.9 million, or $1.63 per share, much of this performance is attributable to
events which management believes will not reoccur in 1997, such as certain
increases in interest expense due to the private placement and a write-off of
certain accounts receivable resulting from a contract with a Brazilian
governmental agency.
With this refocusing nearly completed, we can now devote our attention
in 1997 to the expansion of relationships with our strategic partners in order
to generate increases in sales and to improve overall financial results. We will
concentrate our efforts on increasing the growth in the United States of sales
of our flagship product, the EnWorks(r) family of integrated security systems.
To better meet our needs in the United States, we have expanded our sales,
engineering and technical support staff, as well as our central operations
offices in Boca Raton, Florida. In Brazil, with our downsizing effort nearing
completion, we seek to focus our revamped organization primarily on achieving
increased sales of less-complex security systems and services.
<PAGE>
Already, we have begun to recognize the fruits of these refocusing
efforts as Ensec has received orders totalling approximately $5.5 million since
the initial public offering. We look to 1997 to continue to build upon the
foundation we started in 1996. On behalf of Ensec, I extend to you my sincere
appreciation for your continued loyalty to and belief in the future of Ensec
International, Inc.
/s/ Charles N. Finkel
Charles N. Finkel
Chairman of the Board,
President and Chief Executive Officer
