CERTRON CORPORATION
1545 SAWTELLE BOULEVARD
LOS ANGELES, CALIFORNIA 90025
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held March 24, 1998
The annual meeting of the shareholders of Certron Corporation will be
held on Tuesday, March 24,1998, at 10:00 o'clock A.M., local 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 January 30,
1998, 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 23, 1998
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 23, 1998
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 24, 1998 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 31, 1998 for
inclusion in the Company's proxy statement and form of proxy relating
to that meeting.
Voting Securities
On January 30, 1998, 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 equal 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.
1
Set forth below is information as of January 30, 1998 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 1,546,840 (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 341,640 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 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 January 30, 1998 (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 69 1,451,315(2)(3) 46.2%(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>
2
<TABLE>
Beneficial Ownership of Equity Securities
of Company on January 30, 1998 (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 39 1,236,200(2)(3) 39.3%(2)(3) 1989
President of
the Company and Senior Vice
President and Director of
Louart Corporation, an
investment company
Michael S. Kass 44 1,248,725(2)(3) 39.7%(2)(3) 1988
Executive Vice President of the
Company and President
and Director of Louart
Corporation, an
investment company
Susan E. Kass 41 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 67 15,300 (4) * 1996
Divisional Vice President
of the Company
Rogelio Buenrostro 58 5,000 (4) * 1996
Manager and Chief Executive
Officer-Certron, Mexicali
Jesse A. Lopez 47 5,000 (4) * 1996
Controller of the Company
Directors and Officers as a 1,572,140(1)(2)(5) 48.8%(2)(5)
Group (7 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. Susan Kass, directors and
executive officers of the Company, own shares of the capital stock of
Louart Corporation representing a majority of the voting power of the
outstanding capital stock thereof.
3
Includes for Marshall I. Kass 191,100 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 Marshall I. Kass 10,000 shares, and for each of 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 15,000 shares, for Mr. Buenrostro 5,000 shares
and for Mr. Lopez 5,000 shares issuable upon the exercise of presently
exercisable stock options or options exercisable within 60 days held by
such persons.
(5) Includes 95,000 shares issuable upon stock options held by all officers
and directors as a group which are presently exercisable or exercisable
within 60 days.
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 March 1996, Mr. Jonathan F. Kass was elected President of the
Company. For the five years prior thereto, he served as Executive Vice
President of the Company. In February 1996, Mr. Jonathan F. Kass was
elected as Senior Vice President of Louart Corporation. For the five years
prior thereto, he served as Vice President and Director of Louart
Corporation. In March 1996, Mr. Michael S. Kass was elected Executive Vice
President of the Company. For the five years prior thereto, he served as
Vice President of the Company. In February 1996, Mr. Michael S. Kass was
elected President of Louart Corporation. For the five years prior
thereto, he served as Senior Vice President and Director of Louart
Corporation. 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 general 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.
4
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 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, 1997.
The Board of Directors has a Compensation Committee which consists of
Jonathan F. Kass, Michael S. 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,
1997.
During the fiscal year ended October 31, 1997, there were six 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. Each of the incumbent Directors (each of whom is a
nominee for election at the Annual Meeting) is a Company salaried employee
and does not receive any fee or remuneration for his or her services as a
member of the Board.
Section 16 (a) Beneficial Ownership Reporting Compliance
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 solely upon a review of these filings or
written representations received by the Company from certain reporting
persons, to the Company's knowledge, none of the Company's executive
officers, directors or persons holding more than 10% of the Company's
outstanding shares of Common Stock failed to file on a timely basis any
reports required by Section 16(a) of the Securities Exchange Act of 1934
during the fiscal year ended October 31, 1997.
Compensation of Executive Officers
The following table sets forth the compensation paid, during the fiscal
year ended October 31, 1997, to (i) the Chief Executive Officer and (ii) any
other executive officer whose total compensation for such fiscal year
exceeded $100,000, for services rendered by such persons in all capacities to
the Company:
5
<TABLE>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
------------
Annual
Compensation Awards
------------ -----------
Securities
Name and Principal Fiscal Underlying All Other
Position Year Salary ($) Options (#) Compensation($)(1)
- ------------------ ---- ------------ ----------- ------------------
<CAPTION>
Marshall I. Kass,
<S> <C> <C> <C> <C> <C>
Chairman of the 1997 $175,729 10,000 (2) $31,067
Board, Chief 1996 $167,220 10,000 $31,067
Executive Officer 1995 $160,000 0 $31,067
and Chief Operating Officer
Herbert Bronsten 1997 $100,125 5,000 (2) -
Divisional 1996 $ 96,355 5,000 -
Vice President 1995 $ 62,625 10,000 -
</TABLE>
- ------------
(1) Represents premiums paid during the fiscal year on life insurance
policies maintained by the Company having as of January 1, 1998 an
aggregate estimated net surrender proceeds of $133,116.98 on the life
and for the benefit of Mr. Marshall I. Kass.
(2) These options were granted June 3, 1997 and become exercisable in full
one year from the date of grant.
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, and, as of January 30, 1998, no options were outstanding
under 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 to January 27,
2005.
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
6
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 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, 1997, 64,500 options were
granted under the Executive Plan and no options granted under the 1983 Plan
or the Executive Plan were exercised. The following table sets forth
information regarding the grant of stock options made during fiscal year
ended October 31, 1997 to the Chief Executive Officer of the Company and the
other executive officer named in the Summary Compensation Table above.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
Potential
Realizable
Value at
Assumed
Annual Rates
of Stock
Price
Appreciation
for
Individual Grants Option Term
----------------------------------------------- ------------
Percent of
Number of Total Options
Securities Granted to
Underlying Employees
Options in Fiscal Exercise Expiration
Name Granted (#) Year Price ($/Sh) Date 5%($) 10%($)
- ---------------- ----------- ---------- ------------ ----------- ----- ------
<CAPTION>
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
Marshall I. Kass 10,000 15.5% $1.00 (1) June 3, $0 $2,078
Chairman of the 2002
Board, Chief
Executive Officer
and Chief Operating
Officer
Herbert Bronsten 5,000 7.75% $1.00 (1) June 3, $0 $1,039
Divisonal Vice- 2002
President
</TABLE>
- -----------
(1) The market price per share of the Company's Common Stock as of the date
of grant of the option was $0.81, which amount was less than the
exercise price per share of the option.
The following table sets forth as of October 31, 1997, information as to
the number of unexercised options (none of which are in-the-money options)
held by the Chief Executive Officer of the Company and the other executive
officer named in the Summary Compensation Table above:
7
<TABLE>
AGGREGATED FISCAL YEAR-END OPTION VALUES
Number of Securities
Underlying Unexercised
Options at October 31, 1997
(#)
Name Exercisable/Unexercisable
- ---------------- ---------------------------
<CAPTION>
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
Marshall I. Kass . . . . . . . . . . 20,000 (1) /10,000
Herbert Bronsten . . . . . . . . . . 15,000 /5,000
</TABLE>
____________
(1) An option to purchase 10,000 shares included herein expired by its terms
on January 22, 1998.
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 $6,228.00 per month, subject to annual increases
in September of each year of approximately $160.00 per month. The storage
area in Los Angeles, California is leased to the Company at a present monthly
rental rate of approximately $1,310.00 per month 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. The Company anticipates that such lease will be renewed upon the
expiration thereof on substantially the same terms thereof for a period of
one or more years.
In addition, during the fiscal year ended October 31, 1997 the Company
paid to Louart Corporation approximately $272,000 for the provision of
certain services, including secretarial and administrative services,
consulting services and use of an automobile, and will continue to pay for
such services during the Company's current fiscal year.
8
OTHER BUSINESS
Singer Lewak Greenbaum & Goldstein, LLP was the Company's independent
accountants for the fiscal year ended October 31, 1997 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 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
Please date, sign and mail your
Proxy card back as soon as possible!
Annual Meeting of Shareholders
CERTRON CORPORATION
March 24, 1998
Please Detach and Mail in the Envelope Provided
- -----------------------------------------------------------------------------
Please mark your
A X votes as in this
example
-----
WITHHOLD
AUTHORITY
FOR to vote
all for all
nominees nominees
listed listed
at right at right
(1)ELECTION Nominees: Marshall I. Kass
OF Jonathan F. Kass
DIRECTORS Michael S. Kass
------- ------- Susan E. Kass
(INSTRUCTION: To withhold authority Herbert Bronsten
to vote for any individual nominee Rogelio Buenrostro
write that nominee's name on the Jesse A. Lopez
space provided below)
- --------------------------------------
(2) Such other matters as may properly come before the meeting or
any adjournnment 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 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 or her substitute present
at the meeting may exercise the powers of both said proxies.
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENVELOPE PROVIDED.
- ---------------------------- --------------------------
Signature of Shareholder Signature of Shareholder Date , 1998
------
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.
- -----------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CERTRON CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MARCH 24, 1998
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 24, 1998, at 10 o'clock A.M., local time,
and any adjourment thereof, with respect to:
IMPORTANT SIGN ON OTHER SIDE
