CERTRON CORPORATION
1545 SAWTELLE BOULEVARD
LOS ANGELES, CALIFORNIA 90025
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held March 26, 1996
The annual meeting of the shareholders of Certron Corporation will be
held on Tuesday, March 26, 1996, at 10:00 o'clock A.M., California Time, at
the Company's offices located at 1545 Sawtelle Boulevard, Los Angeles,
California 90025.
The meeting will consider the following business which is described in
the accompanying Proxy Statement:
1. Election of Board of Directors to hold office until their
successors are elected and qualified. The nominees intended to be
presented by the Board of Directors for election are described in the
accompanying Proxy Statement.
2. Such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on February 1,
1996, as the record date for determining those shareholders who will be
entitled to vote at the meeting.
By order of the Board of Directors.
Susan E. Kass
Secretary
February 27, 1996
IT IS DESIRABLE THAT AS LARGE A PROPORTION AS POSSIBLE OF THE
SHAREHOLDERS' INTEREST BE REPRESENTED AT THE MEETING AND, THEREFORE,
IF YOU ARE UNABLE TO BE PRESENT IN PERSON OR OTHERWISE REPRESENTED AT
THE MEETING, YOU ARE REQUESTED TO SIGN AND RETURN THE ENCLOSED PROXY,
SO THAT YOUR SHARES WILL BE REPRESENTED.
PROXY STATEMENT
February 27, 1996
General Information
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Certron Corporation (the "Company") of proxies for
use at the Annual Meeting of Shareholders of the Company to be held on
Tuesday, March 26, 1996 at 10:00 o'clock A.M., at the Company's principal
executive offices located at 1545 Sawtelle Boulevard, Los Angeles, California
90025.
If the accompanying Proxy form is signed, dated and returned, the shares
represented thereby will be voted in accordance with the specifications
therein. If no choice is specified, the shares will be voted FOR the election
of the seven (7) nominees for Director listed in this Proxy Statement. Your
executed Proxy may be revoked at any time before its exercise by filing with
the Secretary of the Company, 1545 Sawtelle Boulevard, Los Angeles, California
90025, a written notice of revocation or a duly executed Proxy bearing a later
date. The execution of the enclosed Proxy will not affect your right to vote
in person should you find it convenient to attend the Annual Meeting and
desire to vote in person. To the Company's knowledge, the Directors of the
Company and the nominees intend to vote FOR the election of such nominees.
The expense of soliciting these Proxies will be borne by the Company. It
is contemplated that Proxies will be solicited principally through the use of
the mails, but officers and regular employees of the Company may solicit
Proxies personally or by telephone or special letter. Although there is no
formal agreement to do so, the Company will reimburse banks, brokerage houses,
and other custodians, nominees and fiduciaries for their reasonable expenses
in forwarding Proxy materials to their principals.
Proposals of security holders intended to be presented at the next annual
meeting must be received by the Company by October 30, 1996 for inclusion in
the Company's proxy statement and form of proxy relating to that meeting.
Voting Securities
On February 1, 1996, the record date for the determination of
shareholders entitled to vote at the Annual Meeting of Shareholders, 3,128,306
shares of the Company's Common Stock were outstanding. The presence, in
person or by proxy, of a majority of the outstanding shares of Common Stock
of the Company is necessary to constitute a quorum at the Annual Meeting of
Shareholders. Each share of Common Stock is entitled to one vote. In
electing directors, each shareholder is entitled to cumulate his votes
and give one candidate a number of votes equals to the number of directors to
be elected, multiplied by the number of shares held by the shareholder or to
distribute his votes among as many candidates he sees fit, if at the meeting
and prior to the voting, any shareholder gives notice of his intention to
cumulate his votes. In the election of directors, the candidates receiving
the highest number of affirmative votes of the shares entitled to be voted at
the meeting, up to the number of directors to be elected, are the directors
elected. Any votes against a candidate or withheld from voting (whether by
abstention, broker non-votes or otherwise) will not be counted and have no
legal effect or effect on the vote.
2
Set forth below is information as of February 1, 1996 with respect to the
shareholders who were known by the Company to own beneficially more than 5% of
the Company's outstanding Common Stock, its only outstanding voting security.
<TABLE>
Amount and
Nature of
Name and Address Beneficial Percent of
of Beneficial Owner Ownership Class
------------------- ------------ ----------
<CAPTION>
<S> <C> <C> <C>
Louart Corporation 1,551,840 (1) 48.4%
1545 Sawtelle Boulevard
Los Angeles, California 90025
</TABLE>
(1) Includes 1,205,200 shares owned directly by Louart Corporation, as
reported in its Schedule 13D, dated January 1994 and filed with the
Securities and Exchange Commission. Such Schedule 13D indicates that
Louart Corporation has sole voting and dispositive power of such shares.
Also includes 346,640 shares beneficially owned (including shares
issuable upon options which are currently exercisable or exercisable
within 60 days) by officers and directors of Louart Corporation.
ELECTION OF DIRECTORS
Unless directed otherwise, it is intended to vote the Proxy in favor of
electing seven (7) persons listed below to serve as Directors of the Company
until the next Annual Meeting and until their successors are duly elected and
qualified. All of such nominees, other than Herbert Bronsten, Rogelio
Buenrostro and Jesse A. Lopez, are now serving as Directors and were elected
by shareholders. The principal occupation or employment of each nominee is
indicated following his or her name on the table set forth below. If any
shares are voted at the meeting for the election of any person other than
those nominees named below, the discretionary authority given to the
designated proxies includes the authority to cumulate votes for any one or
more of the management nominees in such manner as the proxies deem advisable.
If any nominee shall become unavailable for election for any reason which is
not now foreseen, the proxies, will, subject to the foregoing, be voted for
the election of some other qualified persons; provided, however, that the
proxies cannot be voted for a greater number of persons than seven.
<TABLE>
Beneficial Ownership of Equity Securities
of Company on February 1, 1996 (1)
-----------------------------------------
Name and Present Position
with Company or Principal Common Percent of First Elected
Occupation Age Stock Held Class as Director
- - ------------------------- --- --------------- ---------- -------------
<CAPTION>
<C> <S> <C> <C> <C> <C>
Marshall I. Kass 67 1,456,315(2)(3) 46.3%(2)(3) 1988
Chairman of the Board,
Chief Executive Officer and
Chief Operating Officer of
the Company and Chairman
of the Board, Chief Executive
Officer and Chief Operating
Officer of Louart Corporation,
an investment company
</TABLE>
3
<TABLE>
Beneficial Ownership of Equity Securities
of Company on February 1, 1996 (1)
--------------------------------------------
Name and Present Position
with Company or Principal Common Percent of First Elected
Occupation Age Stock Held Class as Director
- - ------------------------- --- --------------- ---------- -------------
<CAPTION>
<S> <C> <C> <C> <C> <C>
Jonathan F. Kass 37 1,236,200(2)(3) 39.3%(2)(3) 1989
Executive Vice President
of the Company and Vice
President and Director of
Louart Corporation, an
investment company
Michael S. Kass 42 1,248,725(2)(3) 39.7%(2)(3) 1988
Vice President of the
Company and President
and Director of Louart
Corporation, an
investment company
Susan E. Kass 39 1,226,200(2)(3) 39.0%(2)(3) 1989
Secretary and Treasurer
of the Company and Vice
President, Secretary and
Director of Louart
Corporation, an investment
company
Herbert Bronsten 65 10,300 (4) * -
Divisional Vice President
of the Company
Rogelio Buenrostro 56 2,500 (4) * -
Plant Manager of the
Company's Mexicali,
Mexico Facility
Jesse A. Lopez 45 4,000 (4) * -
Controller of the Company
Directors and Officers as a 1,555,840(1)(2)(5) 48.4%(2)(5)
Group (5 persons)
</TABLE>
- - -----------------
* Represents less than one percent of the shares of Common Stock
outstanding.
(1) Except as otherwise indicated, nature of beneficial ownership is
possession of sole voting and investment power.
(2) Includes 1,205,200 shares owned by Louart Corporation. Messrs. Marshall,
Jonathan and Michael Kass and Ms. Kass, directors and executive officers
of the Company, own shares of the capital stock of Louart
4
Corporation representing a majority of the voting power of the
outstanding capital stock thereof. Includes for Marshall I. Kass 186,100
shares owned by SEP/IRA, for Michael S. Kass 22,525 shares owned by his
SEP/IRA, and for Jonathan F. Kass 10,000 shares owned by him as custodian
for his minor children. Excludes for Marshall I. Kass 81,500 shares
owned by his wife, of which shares Marshall I. Kass disclaims beneficial
ownership.
(3) Includes for each of Marshall I. Kass, Jonathan F. Kass, Michael S. Kass
and Susan E. Kass 20,000 shares issuable upon the exercise of presently
exercisable options or options exercisable within 60 days held by such
persons.
(4) Includes for Mr. Bronsten 10,000 shares, for Mr. Buenrostro 2,500 shares
and for Mr. Lopez 4,000 shares issuable upon the exercise of presently
exercisable stock options or options exercisable within 60 days held by
such persons.
(5) Includes 84,000 shares issuable upon stock options held by all officers
and directors as a group which are presently exercisable or exercisable
within 60 days. Does not include shares beneficially owned by nominees
for Director who are not currently serving as Director.
In December 1988, Mr. Marshall I. Kass was elected Chairman of the Board
of Directors and Chief Executive Officer, and in June 1990 he was elected as
the Chief Operating Officer of the Company. For more than the past five years
and until February 1996, Mr. Kass served as President of Louart Corporation, a
privately-held investment company. In February 1996, he was elected Chairman
of the Board, Chief Executive Officer and Chief Operating Officer of Louart
Corporation. He is, and for more than the past five years has been, a
Director thereof. The Company and Marshall I. Kass are parties to a five-year
Employment Agreement, dated as of November 1, 1993, pursuant to which Mr. Kass
is employed as the Chairman of the Board and Chief Executive Officer of the
Company at a rate of $200,000 per year, subject to annual adjustment at the
discretion of the Board of Directors of the Company. The Employment Agreement
may be earlier terminated in the event of the death or disability of Mr. Kass
or for "good cause," defined to mean conviction of a crime directly related
to his employment or a felony, gross mismanagement of the business and affairs
of the Company or breach of any material provision of the Employment
Agreement.
In 1991, Mr. Jonathan F. Kass was elected an Executive Vice President of
the Company. Since 1987, he has been a Vice President and Director of Louart
Corporation. For more than five years prior thereto, he was an independent
consultant. For more than the last five years, Mr. Michael S. Kass has been a
Vice President and Director of Louart Corporation. In February 1996, he was
elected President of Louart Corporation. In 1991, he was elected a Vice
President of the Company. For more than the past five years, Ms. Susan E.
Kass has served as the Secretary, Vice President and Director of Louart
Corporation. In 1990, she was elected Secretary and Treasurer of the Company.
Mr. Marshall I. Kass is the father of Mr. Jonathan F. Kass, Mr. Michael S.
Kass, and Ms. Susan E. Kass, all of whom are siblings of one another.
In 1995, Mr. Bronsten became employed by the Company as a Divisional Vice
President. From 1976 to 1993, he served as President of the A.B.C. Premium,
Inc. a retail sales company in Los Angeles, California. In 1993, each of Mr.
Bronsten (individually) and A.B.C. Premium, Inc. filed for protection under
the Federal Bankruptcy Act. For more than the past five years, Mr. Buenrostro
has been employed by the Company as its plant manager in Mexicali, Mexico.
Mr. Lopez, has been employed by the Company since 1992 and has served
as Controller of the Company since January 1994. From 1988 to 1991, Mr. Lopez
served as the Cost Manager of United States Can Company, a metal packaging
company.
5
Except for Marshall I. Kass, all of the executive officers of the Company
serve at the pleasure of the Board of Directors.
The Board of Directors has an Audit Committee which, for the fiscal year
ended October 31, 1995, consisted of Allan H. Kurtzman, who served as a
director of the Company through January 11, 1996, Jonathan F. Kass, Michael S.
Kass and Susan E. Kass. At present, the Audit Committee consists of Jonathan
F. Kass, Michael S. Kass and Susan E. Kass. The Audit Committee recommends to
the Board of Directors the appointment of independent certified public
accountants to perform the audits of the Company, reviews with the accountants
the scope and conduct of the annual audit prior to the completion of the same,
reviews the audit with the accountants following its completion, considers
comments or recommendations made by the independent accountants and approves
all material non-audit services provided by the independent accountants. The
Audit Committee had one meeting with respect to the fiscal year ended October
31, 1995.
The Board of Directors has a Compensation Committee which, for the fiscal
year ended October 31, 1995 consisted of Allan H. Kurtzman, Eric Lomas, who
served as a director of the Company through January 12, 1996, Jonathan F. Kass
and Susan E. Kass. At present, the Compensation Committee consists of
Jonathan F. Kass and Susan E. Kass. The Compensation Committee reviews and
recommends to the Board of Directors the compensation to be paid to executives
of the Company. The Compensation Committee had one meeting with respect to
the fiscal year ended October 31, 1995.
During the fiscal year ended October 31, 1995, there were five meetings
of the Board of Directors and all of the Company's incumbent Directors
attended in excess of 75% of the board meetings and meetings of committees of
which they were members. Directors who are not salaried employees received a
fee of $1,000 per meeting for their services as members of the Board of
Directors and any committee of the Board of Directors on which they serve.
Company salaried employees who are Directors of the Company receive no fee or
remuneration as such for their services as members of the Board.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, as well as persons holding more
than 10% of the Company's outstanding shares of Common Stock, to file initial
reports of ownership and reports of changes of ownership of the Company's
Common Stock with the Securities and Exchange Commission. Executive officers
and directors are required to furnish the Company with copies of all Section
16(a) forms that they file. Based upon a review of these filings and written
representations from certain of the Company's directors and executive officers
that no other reports were required, all such reports were filed on a timely
basis.
Compensation of Executive Officers
The following table sets forth a summary of the compensation paid to the
Chief Executive Officer of the Company for services rendered in all capacities
to the Company for the fiscal years ended October 31, 1993, 1994 and 1995. No
executive officers of the Company other than the Chief Executive Officer were
paid annual salary (together with any bonus) in excess of $100,000 in such
fiscal years for services rendered to the Company.
6
<TABLE>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
----------
Annual Compensation Awards
---------------------------- ----------
Other
Annual Securities All Other
Name and Principal Fiscal Compen- Underlying Compen-
Position Year Salary($) Bonus($) sation($) Options(#) sation($)(1)
- - ------------------ ---- --------- -------- --------- ---------- ------------
<CAPTION>
<C> <S> <C> <C> <C> <C> <C> <C> <C>
Marhall I. Kass, 1995 $160,000 0 0 0 $31,067
Chairman of the 1994 $186,667 0 0 0 $31,067
Board, Chief 1993 $200,000 0 0 10,000 $35,875
Executive Officer
and Chief Operating
Officer
</TABLE>
__________
(1) Represents premiums paid during the fiscal year on life insurance
policies maintained by the Company having as of January 1, 1996 an aggregate
estimated net surrender proceeds of $685,000 on the life and for the benefit
of Mr. Marshall I. Kass.
Stock Options
In January 1983, the Board of Directors adopted a 1983 Stock Option Plan
(the "1983 Plan") which was approved by shareholders in March 1983 and amended
in March 1986 and January 1987. The 1983 Plan expired by its terms in January
1993. The expiration of the 1983 Plan has no effect on outstanding options
granted thereunder prior to the expiration of the 1983 Plan. In January 1989,
the Board of Directors adopted a 1989 Stock Option Plan (the "Executive Plan")
covering 150,000 shares of Common Stock which was approved by shareholders in
March 1989. In January 1995, the Board of Directors adopted an amendment to
the Executive Plan changing its name to the Executive Stock Option Plan,
increasing the number of shares of Common Stock covered thereby from 150,000
to 300,000 and extending the expiration date of the Executive Plan from
January 1999 in March 1995.
Under the 1983 Plan and the Executive Plan both "incentive stock options"
(as defined in Section 422 of the Internal Revenue Code of 1986, as amended)
and non-incentive options could and can be granted to selected executives, key
employees and directors (whether or not employees) of the Company. However,
incentive stock options may be granted only to employees (including officers
and directors who are employees). Under the 1983 Plan and the Executive Plan,
all options were or are required to be granted at exercise prices of not less
than 100% of the fair market value of the Common Stock at the date the
options are granted. The number of shares of Common Stock covered by the
Executive Plan is subject to adjustment in the case of stock splits, reverse
stock splits, stock dividends, recapitalization and similar changes in the
capitalization of the Company.
Stock appreciation rights may be granted with all or part of any option
granted under the Executive Plan. Directors who are not employees of the
Company are not eligible to receive these rights. Stock appreciation rights
entitle the holder thereof, upon exercise of such rights, to surrender the
related option, or any portion thereof, and to receive, without payment to the
Company (except for applicable withholding taxes), an amount equal to the
excess of the fair market value, on the date of such exercise, of the Common
7
Stock covered by such option or portion thereof over the option price of the
Common Stock as provided in the option. The Board of Directors or a committee
thereof has sole discretion to determine the form in which payment may be made
to the employee upon the exercise of any stock appreciation right (i.e.,
Common Stock, cash, or any combination thereof). No stock appreciation rights
were granted under the 1983 Plan nor have been granted under the Executive
Plan.
During the fiscal year ended October 31, 1995, no options were granted
under the Executive Plan and no options previously granted under the 1983 Plan
or the Executive Plan were exercised. The following table sets forth as of
October 31, 1995, information as to the number of unexercised options (none of
which are in-the- monetary options) held by the Chief Executive Officer of the
Company.
<TABLE>
AGGREGATED FISCAL YEAR-END OPTION VALUES
Number of Securities
Underlying Unexercised
Options at October 31, 1995
(#)
Name Exercisable/Unexercisable
- - ---- ---------------------------
<CAPTION>
<C> <S> <C> <C> <C> <C> <C> <C>
Marshall I. Kass . . . . . . . . . . 25,000/0
</TABLE>
Certain Transactions
Louart Corporation (see "Voting Securities" and "ELECTION OF DIRECTORS"
above) leases to the Company a warehouse and packaging facility in Corona,
California, warehouse and storage area in Los Angeles, California and the
Company's corporate and administrative headquarters in Los Angeles,
California. The facility in Corona, California is leased on a triple-net
basis pursuant to a lease expiring August 31, 1998 at a present monthly rental
rate of approximately $6,068.00 per month, subject to annual increases in
September of each year of approximately $160.00 per month. The storage area
in Los Angeles, California which the Company is presently subleasing to an
unrelated third party, is leased at a present monthly rental rate of
approximately $1,246.00 per month, increasing to approximately $1,310.00 per
month commencing March 1996, under a lease expiring August 31, 1998. The
Company's corporate and administrative headquarters in Los Angeles, California
is leased to the Company pursuant to a lease expiring in February 1998 at a
present monthly rental rate of approximately $4,613.00 per month, subject to
annual increases in March of each year based on increases in the consumer
price index and increases in operating expenses from 1992.
In addition, during the fiscal year ended October 31, 1995 the Company
paid to Louart Corporation approximately $259,000 for the provision of certain
services, including secretarial and administrative services, and use of an
automobile, and will continue to pay for such services during the Company's
current fiscal year.
8
OTHER BUSINESS
On October 21, 1994, the Company changed its independent accountants from
Deloitte & Touche LLP to Shillan Abrams & Company. Subsequently, Shillan
Abrams & Company merged with Singer, Lewak, Greenbaum & Goldstein who was the
Company's independent accountants for the fiscal year ended October 31,
1995 and have been selected as the Company's auditors for the current year.
Representatives from that firm are expected to be present at the annual
meeting with the opportunity to make a statement, if they desire to do so,
and are expected to be available to respond to appropriate questions from
shareholders.
The reports of Deloitte & Touche LLP on the financial statements of the
Company for the fiscal years ended October 31, 1992 and 1993 contained no
adverse opinion or disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope or accounting principles. In connection with
audits of the Company for the fiscal years ended October 31, 1992 and 1993
through October 21, 1994, there were not disagreements with Deloitte & Touche
LLP on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not
resolved to the satisfaction of Deloitte & Touche LLP would have caused them
to make reference thereto in their report on the Company's financial
statements for such years. During Registrant's fiscal years ended October 31,
1992 and 1993 and through October 21, 1994, Deloitte and Touch LLP did not
advise the Company of any "reportable events" as defined in Item 304 (a) of
Regulation S-K promulgated by the Securities and Exchange Commission. The
Board of Directors of the Company participated in and approved the decision to
change independent accountants.
The Board of Directors does not know of any business to be presented
other than the matters set forth above, but if other matters come before the
meeting, it is the intention of the proxies to vote in accordance with
their best judgment on such matters.
By Order of the Board of Directors
SUSAN E. KASS
Secretary
9
APPENDIX A
CERTRON CORPORATION'S
PROXY CARD
CERTRON CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MARCH 26, 1996
The undersigned hereby appoints MARSHALL I. KASS and SUSAN E. KASS, and
each of them proxies, each with power of substitution, to vote for the
undersigned at the Annual Meeting of Shareholders of Certron Corporation to be
held at the Company's offices at 1545 Sawtelle Boulevard, Los Angeles,
California 90025, on Tuesday, March 26, 1996, at 10 o'clock A.M., California
Time, and any adjournment thereof, with respect to:
(1) ELECTION OF DIRECTORS
FOR all nominees listed below
----
WITHHOLD AUTHORITY to vote for all nominees listed below
----
- - ------------------------------------------------------------------------------
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided above)
Marshall I. Kass, Jonathan F. Kass, Michael S. Kass, Susan E. Kass,
Herbert Bronsten, Rogelio Buenrostro, Jesse A. Lopez
(2) Such other matters as may properly come before the meeting or any
adjournment thereof; according to the number of shares of stock which the
undersigned would be entitled to vote if personally present, hereby revoking
any prior proxy to vote at such Meeting; and hereby ratifying and confirming
all that said proxies, or any of them, shall lawfully do by virtue hereof.
With respect to matters not known at the time of the solicitation hereof, said
proxies are authorized to vote in their discretion.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CERTRON
CORPORATION
IMPORTANT SIGN ON OTHER SIDE
CONTINUED FROM OTHER SIDE
This proxy when properly executed will be voted in the manner directed.
Unless otherwise marked, this Proxy will be voted FOR the election of some
or all of the persons named in the accompanying Proxy Statement as nominated
by the Board of Directors for election as Directors of Certron Corporation and
may be voted cumulatively.
One of the above-mentioned proxies or his substitute present at the
meeting may exercise the powers of both said proxies.
Date , 1996
----------------------------
IMPORTANT: In signing this Proxy,
please sign your name or names on the
signature lines in the same way as it is
stenciled on this Proxy. When signing
as an attorney, executor, administrator,
trustee or guardian, please give your
full title as such. EACH JOINT TENANT
SHOULD SIGN.
----------------------------------------
Signature of Shareholder
----------------------------------------
Signature of Shareholder
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENVELOPE PROVIDED
