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 ss. 240.14a-11(c) or ss. 240.14a-12
SECURITY CAPITAL CORPORATION
- --------------------------------------------------------------------------------
(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)(1) 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:
___________________________________________________________________
<PAGE>
SECURITY
CAPITAL
CORPORATION
1111 North Loop West
Suite 400
Houston, Texas 77008
Telephone: 713-880-7100
June 2, 1997
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of
Stockholders of Security Capital Corporation (the "Company"), which will be held
in Conference Room 45A, 45th Floor, 101 Park Avenue, New York, New York, on
Thursday, July 10, 1997, commencing at 10:00 a.m. (local time). We look forward
to greeting as many of our stockholders as are able to be with us.
At the meeting, you will be asked to consider and vote upon the election
of four directors and such other business as may properly come before the
meeting and any adjournment thereof.
We hope you will find it convenient to attend the meeting in person.
WHETHER OR NOT YOU EXPECT TO ATTEND, TO ASSURE YOUR REPRESENTATION AT THE
MEETING AND THE PRESENCE OF A QUORUM, PLEASE COMPLETE, DATE, SIGN AND MAIL
PROMPTLY THE ENCLOSED PROXY, for which a return envelope is provided. No postage
need be affixed to the Proxy if it is mailed in the United States.
The Company's Annual Report for the fiscal year ended September 30, 1996
is being mailed to you together with the enclosed proxy materials.
Sincerely,
Brian D. Fitzgerald
Chairman of the Board of Directors
A. George Gebauer
President
<PAGE>
SECURITY CAPITAL CORPORATION
1111 North Loop West, Suite 400
Houston, Texas 77008
(713) 880-7100
----------
Notice of Annual Meeting of Stockholders
----------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Security Capital Corporation (the "Company") will be held
in Conference Room 45A, 45th Floor, 101 Park Avenue, New York, New York, on
Thursday, July 10, 1997, commencing at 10:00 a.m. (local time), for the
following purposes:
(1) To elect four directors to hold office until the next annual meeting
and until their successors are duly elected and qualified; and
(2) To transact such other business as may properly come before the
Annual Meeting and any adjournment thereof.
Only holders of record of the Common Stock or the Class A Common Stock of
the Company at the close of business on May 27, 1997 are entitled to notice of
and to vote at the Annual Meeting and any adjournment thereof.
By Order of the Board of Directors,
A. GEORGE GEBAUER
Secretary
June 2, 1997
================================================================================
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
================================================================================
<PAGE>
----------
PROXY STATEMENT
----------
SECURITY CAPITAL CORPORATION
1111 North Loop West, Suite 400
Houston, Texas 77008
(713) 880-7100
This Proxy Statement is being furnished in connection with the
solicitation of Proxies by and on behalf of the Board of Directors of Security
Capital Corporation (the "Company") to be used at the Annual Meeting of
Stockholders to be held on Thursday, July 10, 1997, and any adjournment thereof
(the "Annual Meeting"), for the purposes set forth in the accompanying Notice of
Annual Meeting. The Company's Annual Report for the fiscal year ended September
30, 1996 accompanies this Proxy Statement. This Proxy Statement and accompanying
materials are expected to be first sent or given to stockholders of the Company
on June 4, 1997.
The close of business on May 27, 1997 has been fixed as the record date
for the determination of the stockholders entitled to notice of and to vote at
the Annual Meeting. Only holders of record as of that date of shares of the
Company's Common Stock, $.01 par value per share (the "Common Stock"), and of
the Company's Class A Common Stock, $.01 par value per share (the "Class A
Common Stock"), are entitled to notice of and to vote at the Annual Meeting. The
Common Stock and the Class A Common Stock are sometimes collectively referred to
herein as the "Common Equity."
Each share of the Common Stock or the Class A Common Stock entitles the
holder thereof to one vote per share on each matter presented to the
stockholders for approval at the Annual Meeting. On May 27, 1997, there were 380
shares of the Common Stock and 4,059,764 shares of Class A Common Stock, for a
total of 4,060,144 shares of the Common Equity, outstanding and entitled to
vote.
Execution of a Proxy by a stockholder will not affect such stockholder's
right to attend the Annual Meeting and to vote in person. Any stockholder who
executes a Proxy has a right to revoke it at any time before it is voted by
advising A. George Gebauer, Secretary of the Company, in writing of such
revocation, by executing a later-dated Proxy which is presented to the Company
at or prior to the Annual Meeting, or by appearing at the Annual Meeting and
voting in person. Attendance at the Annual Meeting will not in and of itself
constitute revocation of a Proxy. The Board of Directors has retained D.F. King
& Co., Inc. to assist in the solicitation of Proxies.
Assuming a quorum, the four nominees receiving a plurality of the votes
cast at the Annual Meeting for the election of directors by holders of record as
of the record date of shares of the outstanding Common Equity, voting as a
single class, will be elected as directors. With regard to the election of
directors, votes may be cast in favor or withheld; votes that are withheld will
be counted for purposes of determining the presence or absence of a quorum on
the election of directors, but will have no other effect.
Unless specified otherwise, the Proxies will be voted FOR the election of
all the nominees to serve as directors of the Company until the next annual
meeting and until their successors are duly
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<PAGE>
elected and qualified. In the discretion of the Proxy holders, the Proxies will
also be voted for or against such other matters as may properly come before the
Annual Meeting. Management is not aware of any other matters to be presented for
action at the Annual Meeting.
The principal executive offices of the Company are located at 1111 North
Loop West, Suite 400, Houston, Texas 77008, and the Company's telephone number
there is (713) 880-7100.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table and the notes thereto set forth information, as of May
27, 1997, with respect to the beneficial ownership of shares of each class of
equity securities of the Company by the only persons known to the Company to
have beneficial ownership of more than 5% of such class, by each director of the
Company, by each executive officer of the Company and by the directors and
executive officers of the Company as a group. Except as otherwise indicated,
each person is believed to exercise sole voting and dispositive power over the
shares reported.
<TABLE>
<CAPTION>
Amount of Beneficial Ownership
as of May 27, 1997
---------------------------------------------------------------------------------------
Percentage
Class A of Class A
Name and Address Common Percentage Common Percentage Common Preferred Percentage
of Beneficial Owner Stock of Class Stock of Class Equity Stock of Class
- ------------------- ----- -------- ----- -------- ------ ----- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Brian D. Fitzgerald 128 31.7% 2,826,706 69.6% 68.2% 27,978 93.3%
One Pickwick Plaza
Suite 310, Greenwich
CT 06830(1)(2)
FGS, Inc. 128 31.7% 2,711,177 66.8% 66.8% 4,160 13.9%
1105 North Market St.
Suite 1300, Wilmington,
DE 19894(1)(2)
Capital Partners, Inc. -- -- 2,356,388 58.0% 58.0% 650 2.2%
One Pickwick Plaza
Suite 310, Greenwich,
CT 06830(1)(2)
CP Acquisition, -- -- 2,356,388 58.0% 58.0% 23,168 77.2%
L.P. No. 1
1105 North Market St.
Suite 1300, Wilmington,
DE 19894(1)(2)
FGS Partners, L.P. -- -- 2,356,388 58.0% 58.0% -- --
One Pickwick Plaza
Suite 310, Greenwich,
CT 06830(1)(2)
William T. Bozarth -- -- -- -- -- -- --
A. George Gebauer(1)(2) -- -- 59,980 1.5% 1.5% 703 2.3%
Thomas J. Gochberg 1 * 8,709 * * -- --
Larry M. Karren -- -- 2,284(3) * * -- --
All Directors and 129 31.9% 2,897,679(3) 71.4% 71.4% 28,681 95.6%
Executive Officers as
a Group (5 persons)
* Less than one percent
</TABLE>
(footnotes on following page)
-4-
<PAGE>
- ----------
(1) The following related entities are generally referred to as "Capital
Partners": (a) CP Inc., a Connecticut corporation, of which Brian D.
Fitzgerald is the sole stockholder and director, and A. George Gebauer is
an officer; (b) Fitzgerald and Partners, a Delaware general partnership
("F&P"), of which Messrs. Fitzgerald and Gebauer are partners; (c) Capital
Partners I, L.P., a New York limited partnership, of which CP Inc. and F&P
are the general partners; and (d) 13 related Delaware limited
partnerships, known collectively as "Capital Partners II," as follows: (i)
CP Acquisition; (ii) CP Acquisition, L.P. No. 2; (iii) CP Acquisition,
L.P. No. 3; (iv) CP Acquisition, L.P. No. 4A; (v) CP Acquisition, L.P. No.
4B; (vi) CP Acquisition, L.P. No. 5A; (vii) CP Acquisition, L.P. No. 5B;
(viii) CP Acquisition, L.P. No. 6A; (ix) CP Acquisition, L.P. No. 6B; (x)
CP Acquisition, L.P. No. 7A; (xi) CP Acquisition, L.P. No. 7B; (xii) CP
Acquisition, L.P. No. 8A; and (xiii) CP Acquisition, L.P. No. 8B. CP Inc.,
FGS, a Delaware corporation, of which Mr. Fitzgerald is the controlling
stockholder, president, treasurer and a director, and FGS Partners, L.P.,
a Connecticut limited partnership, of which CP Inc. is the general
partner, are the general partners of the 13 related partnerships.
Brian D. Fitzgerald owns of record 115,529 shares of the Class A Common
Stock. CP Inc. owns of record 650 shares of the Class A Preferred Stock,
CP Acquisition owns of record 2,356,388 shares of the Class A Common Stock
and 23,168 shares of the Class A Preferred Stock and FGS owns of record
354,789 shares of the Class A Common Stock, 128 shares of the Common Stock
and 4,160 shares of the Class A Preferred Stock.
(2) Mr. Fitzgerald may be deemed to own beneficially the 115,529 shares of the
Class A Common Stock owned of record by him, the 650 shares of the Class A
Preferred Stock owned of record by CP Inc., the 2,356,388 shares of the
Class A Common Stock and the 23,168 shares of the Class A Preferred Stock
owned of record by CP Acquisition and the 354,789 shares of the Class A
Common Stock, the 128 shares of the Common Stock and the 4,160 shares of
the Class A Preferred Stock owned of record by FGS. Mr. Fitzgerald has
shared authority to vote and dispose of the FGS-owned shares of the Class
A Common Stock and the Common Stock and the Class A Preferred Stock and
disclaims beneficial ownership of such FGS-owned shares for all other
purposes. Mr. Gebauer is also a stockholder, officer and director of FGS
and an officer of CP Inc., but he disclaims beneficial ownership of shares
of the Class A Common Stock, the Common Stock and the Class A Preferred
Stock owned of record by such corporations for any purpose. The ownership
noted above excludes the 55,437 shares of the Class A Common Stock and the
Common Stock and the 650 shares of the Class A Preferred Stock owned by
the Fitzgerald Trust (of which Mr. Fitzgerald's brother and father are
sole trustees and Mr. Fitzgerald's minor children are sole beneficiaries),
as to which beneficial ownership is disclaimed for all purposes.
(3) Includes 2,250 shares subject to options exercisable within 60 days.
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<PAGE>
ELECTION OF DIRECTORS
Four directors are to be elected to hold office until the next annual
meeting and until their successors are duly elected and qualified. The names of
the four nominees for election as directors for whom votes will be cast pursuant
to the Proxies solicited hereby are set forth below. All of the nominees listed
below are expected to serve as directors if they are elected. If any nominee
should decline or be unable to accept such nomination or to serve as a director
(an event which the Board of Directors does not now expect), the Board of
Directors reserves the right to nominate another person or to vote to reduce the
size of the Board of Directors. In the event another person is nominated, the
Proxy holders intend to vote the shares to which the Proxy relates for the
election of the person nominated by the Board of Directors.
There is no cumulative voting for directors.
Director Principal Occupations During the Last
Name Age Since Five Years; Other Directorships
- ---- --- ----- -------------------------------
William T. Bozarth 56 1988 Vice President and Controller of The
Travelers Inc., a diversified
financial services company, since
November 1991; Senior Vice President
and Chief Financial Officer of Gulf
Insurance Group, a property and
casualty insurance company, since
September 1990; Executive Vice
President of the Company from March
1989 until January 1990; Senior Vice
President of the Company from August
1984 until March 1989; a former
director or officer of various
present and former sub sidiaries or
affiliates of the Company; and, previ
ously, a Partner of Arthur Andersen &
Co., New York, New York, public
accountants.
Brian D. Fitzgerald 52 1990 Chairman of the Board of the Company
since January 1990; President,
Treasurer and a director of FGS since
March 1989; and a partner, general
partner, stockholder, officer and/or
director of various Capital Partners
entities for more than five years.
Mr. Fitzgerald was a director of
Bryant Universal Roofing, Inc.
("Bryant"), a privately-held Delaware
corporation that on May 17, 1996
filed a petition for bankruptcy under
Chapter 11 of the U.S. Bankruptcy
Code in the United States Bankruptcy
Court for the District of Arizona.
Mr. Fitzgerald is a director of
Storage Dimensions, Inc., a
publicly-traded manufacturer and
seller of high performance data
storage systems.
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<PAGE>
Director Principal Occupations During the Last
Name Age Since Five Years; Other Directorships
- ---- --- ----- -------------------------------
A. George Gebauer 64 1990 President of the Company since
January 1990 and Secretary of the
Company since February 1994; Vice
President, Secretary and a director
of FGS since March 1989; and a
partner, general partner,
stockholder, officer and/or director
of various Capital Partners entities
for more than five years. Mr. Gebauer
was formerly a director and executive
officer of Alpha Modular Systems,
Inc., a privately-held California
corporation which had an involuntary
petition under Chapter 7 of the U.S.
Bankruptcy Code filed against it on
March 18, 1994 by certain of its
creditors in the United States
Bankruptcy Court for the Central
District of California, San
Bernardino division. Mr. Gebauer also
was a director of Bryant, a
privately-held Delaware corporation
that on May 17, 1996 filed a petition
for bankruptcy under Chapter 11 of
the U.S. Bankruptcy Code in United
States Bankruptcy Court for the
District of Arizona. Mr. Gebauer is a
director of Storage Dimensions, Inc.,
a publicly-traded manufacturer and
seller of high performance data
storage systems.
Thomas J. Gochberg 58 1979 President of TJG Holdings, Inc., a
New York corporation which is the
general partner of various real
estate investment entities, since
July 1991; President and Chief
Executive Officer of the Company from
its inception in November 1979 until
January 1990; a former director or
officer of various present and former
subsidiaries or affiliates of the
Company; and a director of Smith
Barney, Inc., New York, New York, an
investment banking holding company,
from February 1979 until March 1984.
The Board of Directors recommends a vote FOR the election of
the four nominees for director.
-7-
<PAGE>
Meetings and Committees of the Board
The Board of Directors held two meetings and acted by written consent four
times during the fiscal year ended September 30, 1996. Each of the directors
attended at least 75% of the aggregate number of meetings of the Board and all
committees on which such director served that were held during the fiscal year
ended September 30, 1996.
The Board of Directors has an Audit Committee and a Stock Option
Committee. The Audit Committee, which is presently composed of Messrs. Gebauer,
Gochberg and Bozarth, selects the independent auditors, consults with such
auditors and with management with regard to the adequacy of the Company's
internal accounting controls, considers any non-audit functions to be performed
by the independent auditors and carries out such activities related to the
financial statements of the Company as the Board of Directors shall from time to
time request. The Audit Committee acted by written consent once during the
fiscal year ended September 30, 1996.
The Stock Option Committee is composed of Messrs. Fitzgerald and Gebauer
and administers the Security Capital Corporation 1982 Incentive Stock Option
Plan. The Stock Option Committee did not meet during the fiscal year ended
September 30, 1996. The 1982 Incentive Stock Option Plan terminated by its terms
on January 25, 1992, and no new options may be granted after that date, although
options outstanding on that date may continue to be exercised according to their
terms. The Board of Directors does not have a nominating committee, compensation
committee or any committee performing similar functions.
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<PAGE>
EXECUTIVE COMPENSATION
1. Summary Compensation Table
The following Summary Compensation Table sets forth certain information
about the cash and non-cash compensation earned by or awarded to the chief
executive officer of the Company, A. George Gebauer, President and Secretary of
the Company, and to the two other executive officers of the Company for services
rendered to the Company during the fiscal years ended September 30, 1996,
September 30, 1995 and September 30, 1994. The Company recently changed its
fiscal year so that it will now end on December 31 of each year.
Summary Compensation Table
Annual Compensation
-------------------
Name and Fiscal All Other
Principal Position Year Salary Bonus Compensation
- ------------------ ---- ------ ----- ------------
A. George Gebauer, President 1996 (1) (1) (1)
and Secretary 1995 (1) (1) (1)
1994 (1) (1) (1)
Brian D. Fitzgerald, 1996 (1) (1) (1)
Chairman of the Board 1995 (1) (1) (1)
1994 (1) (1) (1)
Larry M. Karren 1996 $121,250 $15,997 $5,237(2)
Vice President and 1995 $110,000 $26,204 $3,938
Treasurer 1994 $107,500 $ 8,417 $3,081
- ----------
(1) Messrs. Fitzgerald and Gebauer receive no compensation for their services
as officers of the Company. CP Inc., a corporation controlled by Mr.
Fitzgerald and for which Mr. Gebauer serves as an officer, is paid a
management fee pursuant to the Advisory Services Agreement, dated as of
April 27, 1990 and effective as of January 26, 1990 (the "Advisory
Agreement"), between the Company and CP Inc. Pursuant to the Advisory
Agreement, CP Inc. provides certain advisory services to the Company in
the areas of investments, general administration, corporate development,
strategic planning, stockholder relations, financial matters and general
business policy. The annual fee for such services pursuant to the Advisory
Agreement is $325,000 (due in quarterly installments in advance) plus
certain out-of-pocket costs (which do not include rent and utilities of CP
Inc. and compensation of CP Inc. employees). Such fee is subject to
appropriate adjustment should the scope of operations of the Company
change, whether from an acquisition or otherwise. For example, when the
Company acquired the assets
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<PAGE>
of Possible Dreams, Ltd. and Columbia National Corporation in May 1996,
the Advisory Agreement was amended to increase the annual fee from
$150,000 to $325,000. During fiscal 1996, CP Inc. was paid a fee of
$227,400 and was reimbursed for expenses incurred by it of approximately
$12,800. CP Inc. also was paid an investment banking fee of $200,000 in
connection with the acquisition by the Company of the assets of Possible
Dreams, Ltd. and Columbia National Corporation. In addition, CP Inc. was
reimbursed for approximately $105,000 of legal, investment banking and
other expenses incurred by it on behalf of the Company in connection with
two prospective acquisitions that failed to close. See "Certain
Relationships and Related Transactions."
(2) Includes $1,228 of insurance premiums paid by the Company on a term life
insurance policy for the benefit of Mr. Karren and approximately $4,009 of
Company contributions for the account of Mr. Karren under a Section 401(k)
plan.
2. Option/SAR Grants in Last Fiscal Year
No Options or SARs were granted to any executive officer of the
Company during the fiscal year ended September 30, 1996.
3. Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Value Table
No Options or SARs were exercised by any executive officer of the
Company during the fiscal year ended September 30, 1996. Set forth below are the
number of unexercised options and the value of unexercised, in-the-money options
held by executive officers of the Company at September 30, 1996.
Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of Unexercised Options Value of Unexercised In-the-Money
Number of Held at Fiscal Year End Options at Fiscal Year End(1)
Shares Acquired Value ------------------------------ ---------------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Larry M. Karren -- -- 2,250 -- -- --
</TABLE>
- ----------
(1) Options are "in-the-money" if the closing market price of the Company's
Class A Common Stock on September 30, 1996 exceeded the exercise prices of
the options. There were no in-the-money options held by executive officers
of the Company at September 30, 1996.
-10-
<PAGE>
4. Long-Term Incentive Plan ("LTIP") Awards in Last Fiscal Year
No LTIP Awards were made to any executive officer of the Company
during the fiscal year ended September 30, 1996.
5. Compensation of Directors
William T. Bozarth and Thomas J. Gochberg, who are not employees or
officers of the Company or affiliated with Capital Partners, receive an annual
fee of $5,000 plus reasonable expenses in connection with attendance at meetings
of the Board of Directors or any committee thereof, but do not receive any
separate fee for attendance at meetings. Messrs. Fitzgerald and Gebauer do not
receive any annual fee, or any fees for attendance at meetings.
-11-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Advisory Services Agreement; Acquisition Criteria and Procedures
On April 27, 1990, effective as of January 26, 1990, the Company entered
into the Advisory Agreement with CP Inc., an entity controlled by Mr. Fitzgerald
and for which Mr. Gebauer serves as an officer. Pursuant to the Advisory
Agreement, CP Inc. provides certain advisory services in the areas of
investments, general administration, corporate development, strategic planning,
stockholder relations, financial matters and general business policy. The annual
fee for such services pursuant to the Advisory Agreement was $150,000 (due in
quarterly installments in advance) plus certain out-of-pocket costs (which do
not include rent and utilities of CP Inc. and compensation of CP Inc. employees)
prior to the acquisition of the assets of Possible Dreams, Ltd. and Columbia
National Corporation in May 1996. In connection with such acquisition, the
Advisory Agreement was amended to increase the annual fee to $325,000. Such fee
is subject to appropriate adjustment should the scope of operations of the
Company change again, whether from an acquisition or otherwise. In this regard,
CP Inc. would likely be paid an annual fee for ongoing advisory services
following an acquisition of no more than 4% to 5% of the acquired company's
annual operating profit. Pursuant to the Advisory Agreement and otherwise, no
compensation is paid to the current Chairman of the Board (Mr. Fitzgerald),
President and Secretary (Mr. Gebauer) and Assistant Secretary (Grace Santacqua)
in their respective capacities as such. During fiscal 1996, CP Inc. was paid
$227,400 in fees and reimbursed for expenses incurred by it of approximately
$12,800. In addition, CP Inc. was reimbursed for approximately $105,000 of
legal, investment banking and other expenses incurred by it on behalf of the
Company in connection with two prospective acquisitions that failed to close.
The initial term of the Advisory Agreement was for one year commencing on
January 26, 1990; thereafter, the agreement will be automatically extended for
additional one-year periods unless either party gives 30 days' written notice to
the other of its intention to terminate. The Advisory Agreement was
automatically renewed for a one-year period commencing January 26, 1997.
The Advisory Agreement confirms that, from time to time, CP Inc. may
present acquisition opportunities to the Company that it believes may be
appropriate for the Company, but that CP Inc. is under no obligation to present
any or all acquisition candidates of which it is aware to the Company except for
insurance agency businesses. If the Company or any of its subsidiaries completes
any acquisition which was presented by CP Inc., the Company is obligated to pay
CP Inc. an investment banking fee at the usual and customary rate for
transactions of such size and complexity. This fee is likely to be in the range
of 1% to 1-1/2% of the aggregate purchase price for the acquisition. For
example, CP Inc. was paid an investment banking fee of $200,000 in connection
with the acquisition by the Company of the assets of Possible Dreams, Ltd. and
Columbia National Corporation.
While enterprises proposed for acquisition may be in any line of business,
to date the acquisitions in which CP Inc. and its affiliates have participated
have been primarily in the manufacturing, distribution and service fields.
Consistent with the investment strategies and principles utilized by CP Inc.,
the Company currently intends in general to focus upon, as potential targets,
established companies of medium size with histories of earnings and cash flow
stability, favorable earnings growth prospects, good management and strong
competitive positions. It is currently the Company's plan that acquisitions will
be undertaken directly or by one or more subsidiaries of the Company, with
financing achieved through equity contributed by the Company and debt and
subordinated debt raised at the subsidiary or parent level. It may be necessary
to issue preferred stock, common equity or warrants or options to
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<PAGE>
purchase common equity of the Company or of the acquired entity to one or more
lenders in order to obtain the financing. In some instances, it may be possible
to obtain financing from the sellers of the acquired entity in the form of
subordinated notes or earn-outs. Such sellers may also receive shares of common
equity or warrants or options to purchase the same of the Company or the
acquired entity. Typically, certain members of management of the acquired entity
will be granted incentives (usually equity-based) to remain with the acquired
entity following the acquisition. The companies targeted usually will have
annual operating profits of $3,000,000 to $10,000,000. Consequently, purchase
prices should range from approximately $10,000,000 to $75,000,000. Under such
acquisition strategy, significant uncertainties involving product life cycles,
volatile market demand, organization changes and other major turnaround aspects
will generally disqualify a prospect. The acquisition criteria set forth above
are only guidelines and may change from time to time in response to market
conditions, the Company's financial condition and results of operations and
other factors.
In connection with its acquisition activities on behalf of the Company,
other portfolio companies and for its own account, CP Inc. maintains ongoing
relationships with hundreds of merger and acquisition intermediary firms,
ranging from large investment banks and accounting firms to small business
brokerages. In a typical year, CP Inc. receives over 1,000 leads on companies
which are or might be for sale. Of these, perhaps 100 are sufficiently close to
the Company's acquisition criteria set forth above to merit further
consideration.
CP Inc. may decide at some future date to present one of its portfolio
companies to the Company for possible acquisition. Any such acquisition would be
submitted to the Company's independent directors for their approval.
INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors
selected Deloitte & Touche as independent auditors of the Company for the fiscal
year ending December 31, 1997. One or more representatives of Deloitte & Touche,
which has served as the Company's independent auditors since October 22, 1990,
are expected to be available by telephone at the Annual Meeting to respond to
appropriate questions. They will have an opportunity to make a statement if they
so desire.
In addition to performing customary audit services, Deloitte & Touche will
assist the Company with the preparation of its Federal and state income tax
returns, for which it will charge the Company its customary billing rates.
Material non-audit services will be approved by the Audit Committee prior to the
rendering of such services after due consideration of the effect of the
performance thereof on the independence of the auditors.
EXPENSES OF SOLICITATION
The total cost of the Proxy solicitation will be borne by the Company. In
addition to the mails, Proxies may be solicited by directors and officers of the
Company by personal interviews, telephone and telegraph. The Company has
retained D.F. King & Co., Inc., New York, New York, to assist in the
solicitation of Proxies for a fee estimated to be $1,500 plus reimbursement of
out-of-pocket expenses. It is anticipated that banks, brokerage houses and other
custodians, nominees and fiduciaries will forward soliciting material to the
beneficial owners of shares of Common Equity entitled to vote at the Annual
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<PAGE>
Meeting and that such persons will be reimbursed for their out-of-pocket
expenses incurred in this connection.
STOCKHOLDER PROPOSALS
Stockholders are hereby notified that, if they intend to submit proposals
for inclusion in the Company's Proxy Statement and Proxy for its 1998 Annual
Meeting of Stockholders, such proposals must be received by the Company no later
than December 4, 1997 and must otherwise be in compliance with applicable
Securities and Exchange Commission regulations.
MISCELLANEOUS
The Board of Directors knows of no other business to be presented at the
Annual Meeting. If, however, other matters properly do come before the Annual
Meeting, it is intended that the Proxies in the accompanying form will be voted
thereon in accordance with the judgment of the person or persons holding such
Proxies.
STOCKHOLDERS ARE URGED TO COMPLETE, DATE, SIGN AND MAIL PROMPTLY THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED. PROMPT RESPONSE WILL GREATLY FACILITATE
ARRANGEMENTS FOR THE ANNUAL MEETING, AND YOUR COOPERATION WILL BE APPRECIATED.
By Order of the Board of Directors,
A. GEORGE GEBAUER
Secretary
Houston, Texas
June 2, 1997
<PAGE>
SECURITY CAPITAL CORPORATION
Annual Meeting of Stockholders - July 10, 1997
The undersigned hereby appoints Brian D. Fitzgerald and A. George Gebauer,
and each of them, proxies, with full power of substitution, to appear on behalf
of the undersigned and to vote all shares of Common Stock (par value $.01) and
Class A Common Stock (par value $.01) of Security Capital Corporation that the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
in Conference Room 45A, 45th Floor, 101 Park Avenue, New York, New York on
Thursday, July 10, 1997, commencing at 10:00 a.m. (local time), and at any
adjournment thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
LISTED NOMINEES AS DIRECTORS.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
(Continued and to be signed on reverse side)
<PAGE>
Please mark box |_| or |X| in blue or black ink.
1. Election of Directors: FOR all nominees listed below |_|
WITHHOLD AUTHORITY to vote |_| EXCEPTIONS |_|
for all nominees listed below
Nominees: WILLIAM T. BOZARTH, BRIAN D. FITZGERALD, A. GEORGE GEBAUER,
THOMAS J. GOCHBERG (Instructions: To withhold authority to vote for any
nominee, mark the "Exceptions" box and write that nominee's name in the
space provided below.)
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting and any
adjournment thereof.
Please sign exactly as your name appears on
the left. When signing as an attorney,
executor, administrator, trustee or
guardian, please give your full title. If
shares are held jointly, each holder should
sign.
PLEASE CHECK HERE IF YOU PLAN TO ATTEND THE
ANNUAL MEETING |_|
Dated: _____________________________, 1997
___________________________________________
Signature
___________________________________________
Signature
Please sign, date and return the proxy card using the enclosed envelope.
