SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SECOM GENERAL 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)(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: ____________________________________________________________
<PAGE>
NOTICE
[ Secom General Corporation Logo ]
ANNUAL MEETING OF STOCKHOLDERS
APRIL 12, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Secom
General Corporation ("Secom" or the "Company"), a Delaware corporation, will
be held at 10:00 a.m., Eastern Standard Time, on Monday, April 12, 1999 at
the Company's Uniflow offices, located at 46001 Grand River Avenue, Novi,
Michigan 48374, to consider and act upon the following items of business:
1. To elect five directors to serve until the next annual Meeting of
Shareholders and until their successors are duly elected.
2. To approve an amendment to the Certificate of Incorporation of the Company
which would effect a reverse stock split at the rate of one new share for
each seven shares of currently outstanding Common Stock of the Company.
3. To ratify and approve the selection of Rehmann Robson, P.C. as independent
auditors for the fiscal year ending September 30, 1999.
4. To transact such other business as may properly come before the Meeting or
any adjournment thereof.
All of the above matters are more fully described in the accompanying
Proxy Statement. Only record holders of Common Stock at the close of business
on February 24, 1999 are entitled to notice of and to vote at the meeting or
any adjournment or adjournments thereof. A list of all stockholders as of
February 24, 1999 will be open for inspection at the Annual Meeting.
By Order of the Board of Directors,
SCOTT J. KONIECZNY
Secretary
All stockholders are invited to attend the Meeting. If you are unable
to attend, please complete, date, sign and mail the enclosed Proxy Card
promptly so that your shares may be represented at this meeting and to ensure
a quorum. No postage is required if mailed in the United States using the
accompanying envelope. If you attend the meeting, you may withdraw your Proxy
and vote your shares. Proxies can also be revoked by submitting a new proxy
with a later date or by delivering written instructions to the Secretary of
Secom.
When completing your Proxy Card, please sign your name as it appears
printed. If signing as attorney, executor, administrator, trustee or
guardian, please give your full title. A Proxy executed by a corporation must
be signed by an authorized officer.
Novi, Michigan
March 22, 1999
<PAGE>
Preliminary Copy
PROXY STATEMENT
[ Secom General Corporation Logo ]
SOLICITATION OF PROXIES
The enclosed Proxy is solicited by the Board of Directors (the "Board")
of the Company for purposes set forth in this Notice for Annual Meeting of
Stockholders (the "Meeting"). The solicitation is being made by mail and the
Company may also use its officers and regular employees to solicit proxies
from stockholders either in person or by telephone, facsimile or letter
without additional compensation. The Company will pay the cost for
solicitation of proxies, including preparation, assembly and mailing the
proxy statement and proxy. Such costs normally include charges from brokers
and other custodians, nominees and fiduciaries for the distribution of proxy
materials to the beneficial owners of Common Stock.
The Common Stock of the Company is the only outstanding class of voting
securities. Each stockholder of record at the close of business on February
24, 1999 (the "record date") is entitled to vote at the Meeting. As of the
close of business on the record date, there were 5,335,400 shares of Common
Stock outstanding. Each share is entitled to one vote on each of the matters
to come before the Meeting and is not entitled to cumulative voting rights. A
majority of the outstanding shares of Common Stock will constitute a quorum
for the Meeting.
Proxies returned to the Company or its transfer agent, American Stock
Transfer and Trust Company ("Transfer Agent"), and properly executed will be
voted in accordance with stockholders' instructions. Stockholders specify
their choices by appropriately marking the enclosed Proxy card. Brokers
holding shares for the account of their clients may vote such shares either
in the manner directed by their clients or in their own discretion if
permitted by the exchange or other organization of which they are members.
Properly executed proxies that are marked abstain or held in street name by
brokers that are not voted on one or more proposals, if otherwise voted on at
least one proposal ("broker non-votes"), will be included in the number of
shares present at the Meeting for the purpose of determining whether a
quorum exists for the conduct of business. Abstentions have the same effect
as a vote against the proposal for which such abstention applies while broker
non-votes are not treated as a vote for or a vote against any of the
proposals to which such broker non-votes applies. Any Proxy which is timely
signed and returned with no other markings will be voted in accordance with
the recommendation of the Board of Directors. The Proxies also give the Board
discretionary authority to vote the shares represented thereby on any matter
which was not known as of the date of this Proxy Statement and is properly
presented for action at the Meeting.
The execution of a Proxy will in no way affect a stockholder's right to
attend the Annual Meeting and vote in person. Stockholders have the right to
revoke their Proxies prior to the Annual Meeting by giving notice to the
Company's Secretary at the executive office of Secom. Stockholders may also
revoke a previously submitted proxy at the Annual Meeting by giving notice to
the Company's Secretary at the meeting.
For convenience in voting your shares on the enclosed Proxy card, we
have enclosed a postage-paid return envelope to the Company's Transfer Agent
who will assist in tabulating the stockholder vote. Secom's mailing address
is 46035 Grand River Avenue, Novi, Michigan 48374, its telephone number is
(248) 305-9410 and facsimile number is (248) 347-2829.
The approximate mailing date of this Proxy Statement and related proxy
materials is March 22, 1999.
1
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to
those persons who are known by management of the Company to have been a
beneficial owner of more than five (5%) percent of the Company's outstanding
Common stock as of the February 24, 1999 record date.
Name and Address Amount and Nature of
of Beneficial Owner Beneficial Ownership Percent Owned(1)
------------------- -------------------- ----------------
Manubusiness Opportunities, Inc.
c/o 24417 Groesbeck Highway
Warren, Michigan 48089 .............. 1,630,428(1) 30.56%
Secom General Corporation 401(k) Plan
46035 Grand River Avenue
Novi, Michigan 48374 ................ 517,057(2) 9.69%
John Cocke
46657 Arboretum
Plymouth, Michigan 48170 ............ 410,730 7.70%
- ---------
(1) Three Stockholders of Manubusiness Opportunities, Inc. ("MOI"), Gregory
Adamczyk, Rocco Pollifrone and Richard Thompson, are Directors of Secom.
(2) Participants of the Company's 401(k) Plan can vote their pro rata portion
of the shares owned by the Plan. Shares not voted by participants may be
voted by the Plan's trustee, Scott Konieczny. Shares owned by the 401(k)
Plan for the account of persons who are not officers or directors are not
included in the shares as shown beneficially owned by all directors and
officers as a group. Of the shares owned by the Company's 401(k) Plan,
approximately 44,647 are owned for the account of officers and directors
and are treated as being owned directly. See "Security Ownership of
Management."
Security Ownership of Management
The following table sets forth information with respect to the
beneficial ownership of shares of the Company's Common Stock by the present
Directors and Named Executive Officers of the Company.
Number of Shares
Beneficially
Owned as of
Name February 24, 1999(1) Percent Owned(2)
---- -------------------- ----------------
Robert A. Clemente ............. 232,999(3)(4) 4.26%
Gregory Adamczyk ............... 321,194(3)(5) 6.02%
Rocco Pollifrone ............... 114,130(3)(6) 2.14%
Richard Thompson ............... 532,798(3)(7) 9.99%
Martin J. Eidemiller ........... 57,845(3)(8) 1.08%
Terry Hamilton ................. 523 *
Current Directors and Officers
as a Group (totaling 6) ...... 1,259,489(9) 22.90%
- ---------
* Less than 1% of the outstanding shares.
(1) To the best of the Company's knowledge based on information reported by
the Directors or executive officers or contained in the Company's
shareholder records. Each of the named persons is presumed to have sole
voting and sole investment power with respect to all shares shown, except
as otherwise indicated by additional information included in the
footnotes to this table.
(2) For the purposes of this table, shares indicated as being beneficially
owned include shares for which the person has the direct or indirect: (i)
voting power, which includes the power to vote or to direct the voting,
and/or (ii) investment power, which includes the power to dispose or to
direct the disposition, of the shares of Common Stock indicated. Unless
otherwise indicated, the beneficial owner has sole investment and voting
power. Shares indicated as being beneficially owned also include shares
not presently outstanding but which are subject to exercise within 60
days through
2
<PAGE>
options, warrants, rights or conversion privileges. For the purpose of
computing the percentage of the outstanding shares beneficially owned by
a stockholder, any shares issuable to such persons under stock options
exercisable within 60 days are deemed to be outstanding securities of the
class owned by the stockholder but are not deemed to be outstanding for
the purpose of computing the percentage owned by any other person.
(3) A director of the Company. The address for all directors is c/o Secom
General Corporation, 46035 Grand River Avenue, Novi, Michigan 48374.
(4) Includes (a) 135,000 shares which Mr. Clemente has the right to acquire
within 60 days pursuant to the exercise of stock options, and (b) 31,556
shares which represents 49% of the 64,400 shares beneficially owned by
Career Opportunities, a partnership of which Mr. Clemente is a general
partner.
(5) Represents 19.7% of the 1,630,428 shares that are beneficially owned by
MOI, as Mr. Adamczyk owns 19.7% of the Common Stock of MOI. See "Principal
Stockholders -- Manubusiness Opportunities, Inc."
(6) Represents 7% of the 1,630,428 shares that are beneficially owned by MOI,
as Mr. Pollifrone owns 7% of the Common Stock of MOI. See "Principal
Stockholders -- Manubusiness Opportunities, Inc."
(7) Includes (a) 500,052 shares which represents 30.67% of the 1,630,428
shares that are beneficially owned by MOI, as Mr. Thompson owns 30.67% of
the Common Stock of MOI, and (b) 32,844 shares which represents 51% of
the 64,400 shares beneficially owned by Career Opportunities, a
partnership of which the Orville K. Thompson Living Trust (the "Trust")
is a partner and Mr. Thompson is a beneficiary of the Trust. Does not
include 16,588 shares of Common Stock which are owned by Mr. Thompson's
sister under the Michigan Uniform Gifts to Minors Act. Although Mr.
Thompson is the custodian pursuant to such gift, he does not exercise the
power to vote such shares and disclaims beneficial ownership of such
shares. See "Principal Stockholders -- Manubusiness Opportunities, Inc."
(8) Includes 30,000 shares of Common Stock which Mr. Eidemiller has the right
to acquire within 60 days pursuant to the exercise of stock options.
(9) Shares shown as beneficially owned by more than one Director or officer
are included only once in the total.
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<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Five Directors will be elected to the Board at the Annual Meeting, each
to hold office until the next Annual Meeting of Stockholders or until a
successor is elected and qualified. Unless authority is withheld on the
attached form of proxy card, all Proxies will be voted for the election of
the nominees set forth below to serve as Directors. Under provisions of the
Delaware General Corporation Law, the election of Secom's Directors requires
a plurality of the votes represented in person or by proxy at the meeting.
The five persons nominated have agreed to serve if elected. In the
event that a nominee is unable to serve or will not serve as a Director and
such fact is known by the Company at the Annual Meeting, then all Proxies may
be voted by the Board at the Annual Meeting for any other person duly
nominated for that open position.
The Board recommends a vote "FOR" the election of Robert A. Clemente,
Gregory Adamczyk, Rocco Pollifrone, Richard Thompson, and Martin Eidemiller as
Directors of Secom.
The following table sets forth certain information regarding
management's nominees for election to the Board of Directors. All of the
nominees are currently Directors of the Company.
<TABLE>
<CAPTION>
Name and Age Position and Principal Occupation
------------ ---------------------------------
<S> <C>
Robert A. Clemente, 45 ...... Director of the Company since December 1993 and
Chairman since December 1994. Mr. Clemente is an
attorney and certified public accountant and, since
January 1997, Of Counsel to the firm of Munro &
Munro, PC, Troy, Michigan where Mr. Clemente
practices law, specializing in corporate, commercial
and tax law. From December 1993 through May 1998, Mr.
Clemente was President and Chief Executive Officer of
the Company and from December 1993 to December 1996,
Mr. Clemente was Of Counsel to the law firm of Hardy,
Lewis and Page, PC, Birmingham, Michigan,
Gregory Adamczyk, 44 ........ Director of the Company since December 1993.
President and owner of Future Planning Corp. since
December 1980, Mr. Adamczyk is also Chairman,
Director and founder of Forward Planning Corp. Both
Future Planning Corp. and Forward Planning Corp. are
based in Livonia and specialize in manufacturing and
engineering consulting, primarily for automotive
factories.
Rocco Pollifrone, 42 ........ Director of the Company since December 1993. Mr.
Pollifrone is President and Chief Executive Officer
of Forward Planning Corp. and has been employed there
or with affiliated companies for over 10 years in
various management positions.
Richard Thompson, 29 ........ Director of the Company since December 1993. Mr.
Thompson has been the President of MST Steel Corp.,
based in Warren, MI., since 1998 and was Vice
President of MST Steel Corporation since 1991. MST
Steel Corp. is a steel service center that
warehouses, processes and sells flat-rolled steel,
primarily for the automotive industry.
Martin J. Eidemiller, 41 .... Director of the Company since June 1998. Mr.
Eidemiller has been a member of the Company's
Operating Committee since June 1998 and a Vice
President of the Company since 1994. Mr. Eidemiller
has been engaged in various management positions with
the Company for over 10 years.
</TABLE>
4
<PAGE>
Certain Information Regarding the Nominees
Robert Clemente, Director and Chairman of the Board, is the brother of
Paul Clemente, who is a Vice President and a member of the Company's
Operating Committee. There are no other family relationships among the
Directors listed above or the Company's executive officers.
Directors' Committees and Meetings
During the fiscal year ended September 30, 1998, the Board held six (6)
meetings and all Directors attended those meetings. The Board has an Audit
Committee and a Compensation and Remuneration Committee.
The Audit Committee, which met four (4) times last year, is responsible
for recommending to the Board of Directors the selection of the independent
public accountants; approving the scope and nature of services provided by
the independent public accountants; reviewing the results of the annual audit
with the independent accountants; and evaluating their independence. The
current members of the Audit Committee are Robert A. Clemente, Gregory
Adamczyk and Rocco Pollifrone.
The Compensation Committee, which held four (4) meetings last year,
reviews the performance of and determines the salary levels and other
compensation arrangements for the Company's executive officers. The current
members of the Compensation Committee are Gregory Adamczyk and Rocco
Pollifrone.
PROPOSAL 2
APPROVAL OF AN AMENDMENT TO CERTIFICATE OF INCORPORATION
TO EFFECT A REVERSE STOCK SPLIT OF OUTSTANDING SHARES
OF COMMON STOCK
General Background
Management is proposing to effect a reverse split of the Company's
Common Stock (the "Reverse Stock Split"), pursuant to an amendment to the
Company's Certificate of Incorporation. If approved by the stockholders, the
exact ratio of the Reverse Stock Split will be one (1) new share of the
Company's Common Stock ("New Common Stock") for every seven (7) old shares of
Common Stock presently outstanding ("Old Common Stock"). The Reverse Stock
Split would be effective on April 13, 1999 (the "Effective Date").
Principal Effects of Reverse Stock Split
The Company is currently authorized to issue 10,000,000 shares of
Common Stock, of which 5,335,400 shares were issued and outstanding as of the
record date. If consummated, the Reverse Stock Split would result in the
conversion of seven (7) shares of Old Common Stock into one (1) share of New
Common Stock, leaving approximately 762,200 shares of New Common Stock
outstanding (prior to any fractional share redemptions as described below).
Other than as a result of any fractional share redemptions, the proposed
Reverse Stock Split would not affect any stockholder's proportionate equity
interest in the Company or the number of authorized shares. The relative
rights and preferences attributable to a share of Common Stock will remain
unchanged. For example, each new share will entitle the holder to: (1) one
(1) vote on matters submitted for stockholder vote; and (2) pro-rata
participation in dividends and other distributions with respect to the Common
Stock. Further, outstanding options to purchase shares of Common Stock of the
Company would be correspondingly adjusted pursuant to the terms of such
options.
As a result of the Reverse Stock Split, certain stockholders will hold
less than 100 shares. These stockholders may incur additional brokerage costs
on the sale of their shares.
5
<PAGE>
Background and Reasons for the Proposal
NASDAQ Listing Requirements
The Common Stock of the Company has been listed on the NASDAQ National
Market System since January 7, 1992. The NASDAQ National Market System has
certain minimum requirements for continued listing, including maintainence of
a per share closing bid price of $1.00 and a market value of public float
(MVPF) greater than or equal to $5,000,000. Since its initial listing, the
Company maintained compliance with all of the NASDAQ National Market System
minimum listing requirements. However, in mid-August 1998, the price for the
Company's Common Stock fell below the $1.00 minimum bid price per share and
has not recovered. The lower minimum bid price coupled with the number of
outstanding shares held by nonaffiliates caused the Company's MVPF to drop
below the $5,000,000 minimum.
On August 19, 1998, the Company received notification from NASDAQ
giving the Company until November 17, 1998 to demonstrate compliance with the
MVPF Rule. On September 16, 1998, the Company received a second notification
from NASDAQ giving the Company until December 16, 1998 to demonstrate
compliance with the minimum bid price requirement. Prior to the November 17,
1998 deadline, the Company requested a hearing for continued listing on the
NASDAQ National Market despite failure to meet these requirements and a
hearing was held on Thursday, January 21, 1999. At this hearing, the Company
attempted to demonstrate its ability to regain compliance with continued
listing requirements, as well as sustain long-term compliance.
On March , 1999, the NASDAQ hearing panel issued a ruling allowing the
Company to move to the NASDAQ Smallcap System subject to the Smallcap System
minimum requirements for continued listing, including a $1.00 minimum bid
price and MVPF greater or equal to $1,000,000. While the Company currently
satisfies the $1,000,000 MVPF requirement, it fails to satisfy the $1.00
minimum bid price requirement. By effectuating the Reverse Stock Split, the
Company expects that it would increase its per share price in order to bring
itself into compliance with the minimum bid price requirement of the NASDAQ
Smallcap System.
Of course, there can be no assurance that the increased market price of
the Common Stock after the Reverse Stock Split will be sustained or that the
Company will remain in compliance with NASDAQ's other requirements for
continued listing on the Smallcap system.
If the Company's stock is delisted from the NASDAQ National Market
System and fails to qualify for the NASDAQ Smallcap System, it would continue
to be traded over the counter. In general, however, delisting would cause the
Company's stock to be less attractive to many investors.
Other Considerations
Management believes that a low per-share market price of the Common
Stock makes the Company's shares unattractive to the financial community and
the investing public. In addition, management believes that a low per-share
price creates a negative impression of the Company and reduces the effective
marketability of the Company's shares. Moreover, the policies and practices
of many brokerage houses discourage brokers within those firms from dealing
in lower-priced stocks. Some of those policies and practices pertain to the
payment of brokers' commissions and to time-consuming procedures that make
handling of lower-priced stocks economically unattractive to brokers. Also,
the structure of trading commissions tends to have an adverse impact upon
holders of lower-priced stock because the brokerage commission payable on its
sale generally represents a higher percentage of the sales price than that of
a higher-priced stock.
Although full assurance cannot be given, management is hopeful that the
increase in the market price of the Company's stock as a result of the
Reverse Stock Split will allow the Company to qualify for continued listing
on the NASDAQ Smallcap System and sustain or increase investor interest.
The Company has no present intention to issue any additional shares,
other than pursuant to the exercise of existing stock options.
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<PAGE>
Execution and Consequences of Reverse Stock Split
Exchange of Stock Certificates
As soon as practicable after the Effective Date, stockholders will be
notified and requested to surrender their certificates of Old Common Stock
for certificates representing the corresponding number of shares of the New
Common Stock after the Reverse Stock Split. The notice will provide
instructions as to the procedures to forward certificates, and each record
holder will also be sent a Letter of Transmittal which should be completed
and returned with the certificate(s) for Old Common Stock. Certificates for
the New Common Stock will be issued promptly thereafter. Until so
surrendered, each certificate representing shares of Old Common Stock will be
deemed for all corporate purposes after the Effective Date to evidence
ownership of the New Common Stock in the appropriately reduced number. The
Company has appointed the Transfer Agent to act for stockholders in effecting
the exchange of their certificates.
Payment for Fractional Shares
No fractional shares will be issued in connection with the Reverse
Stock Split. Instead, stockholders who would otherwise be entitled to receive
fractional shares because they hold a number of shares of Old Common Stock
not evenly divisible by the Split Factor will be entitled to receive a cash
payment in lieu thereof at a price equal to the fair market value of the
stock as determined by the Board on the effective date of the Reverse Stock
Split. The ownership of a fractional interest will not give the holder
thereof any voting, dividend or other right except to receive payment
therefor as described herein.
Stockholders should be aware that, under the escheat laws of the
various jurisdictions where stockholders reside, where the Company is
domiciled and where funds will be deposited, sums due hereunder that are not
timely claimed after the effective date of the Reverse Stock Split may be
required to be paid to the designated agent for each such jurisdiction,
unless correspondence has been received by the Company or its Transfer Agent,
as the case may be, concerning ownership of such funds within the time
permitted in such jurisdictions. Thereafter, stockholders otherwise entitled
to receive such funds will have to seek to obtain them directly from the
state to which they are paid.
Certain Federal Income Tax Consequences
The following description of federal income tax consequences of the
Reverse Stock Split is based on the Internal Revenue Code, the applicable
Treasury Regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this Proxy
Statement. This discussion is for general information purposes only and does
not address all the tax consequences that may be relevant to a particular
stockholder (such as non-resident aliens, broker- dealers or insurance
companies). Furthermore, no foreign, state or local tax consequences are
discussed herein.
THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED BELOW DEPEND UPON EACH
STOCKHOLDER'S PARTICULAR TAX STATUS, AND THE INCOME TAX LAWS, RULES,
REGULATIONS AND DECISIONS WHICH MAY BE SUBJECT TO PROSPECTIVE OR RETROACTIVE
CHANGE. THE DISCUSSION BELOW IS NOT INTENDED AS LEGAL ADVICE. RATHER, EACH
STOCKHOLDER SHOULD CONSULT HIS OR HER TAX COUNSEL OR ADVISOR FOR A COMPLETE
UNDERSTANDING OF TAX CONSEQUENCES APPLICABLE TO HIM OR HER.
Generally, the Reverse Stock Split will not result in recognition of
gain or loss (except in the case of cash received for fractional shares as
described above). Stockholders will receive a carry-over tax basis -- the tax
basis of the new shares will be the same as the currently outstanding shares
(reduced by the tax basis allocable to the receipt of cash, if any, in lieu
of fractional shares). Further, the holding period of the shares of
post-split stock will generally include the stockholders' holding period for
the currently outstanding shares.
7
<PAGE>
A stockholder who receives cash in lieu of fractional shares will be
treated as if the Company had issued shares to him or her and then
immediately redeemed them for cash. Such stockholder should generally
recognize gain or loss, as the case may be, measured by the difference
between the amount of cash received and the tax basis of such stockholder's
pre-split stock allocable to such redeemed shares, had such redeemed shares
actually been issued. Such gain or loss will be capital in nature (if such
stock was held as a capital asset), and any such capital gain or loss will
generally be long-term capital gain or loss to the extent such stockholder's
holding period for his or her stock exceeds 12 months.
Vote Required
Approval of the Reverse Stock Split and adoption of the amendments to
the Certificate of Incorporation require the affirmative vote of a majority
of the shares of the Company's Common Stock present in person or by proxy at
the stockholder meeting and entitled to vote on this subject matter.
Abstention and broker non-votes will be counted as votes against adoption of
the proposed amendments to the Certificate of Incorporation. The Company's
Officers and Directors intend to vote their shares in favor of the Reverse
Stock Split. The Board of Directors unanimously recommends that stockholders
vote FOR Proposal 2.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
On November 23, 1998, the Company dismissed Deloitte & Touche LLP and
appointed the accounting firm of Rehmann Robson P.C. as independent
accountants for fiscal 1998 to replace Deloitte & Touche LLP effective with
such appointment. The Board of Directors approved the selection of Rehmann
Robson P.C. as new independent accountants upon the recommendation of the
Audit Committee and Rehman Robson P.C. audited the Company's consolidated
financial statements for the fiscal year ending September 30, 1998.
The Board of Directors has selected Rehman Robson P.C. as the Company's
independent auditors for the fiscal year ending September 30, 1999. The Board
of Directors has directed that management submit the selection of independent
auditors for the fiscal year ending September 30, 1999 for ratification by
the stockholders at the Annual Meeting. Representatives of Rehman Robson P.C.
are expected to be present at the 1999 Annual Meeting of Stockholders, will
have an opportunity to make a statement if they so desire, and will expect to
respond to appropriate questions.
With respect to the dismissal of Deloitte & Touche LLP, during the two
most recent fiscal years and interim periods subsequent to the Company's
fiscal year end of September 30, 1998, there have been no disagreements with
Deloitte & Touche LLP on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure or any
reportable events. Deloitte & Touche LLP's report on the consolidated
financial statements for the past two years contained no adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty,
audit scope or accounting principles.
EXECUTIVE OFFICERS
The executive officers shown below currently serve in the capacities
indicated. Each executive officer holds his position until his successor is
appointed or his death, resignation or removal by the Board.
Name Age Positions with the Company
---- --- --------------------------
Robert A. Clemente ........ 45 Chairman of the Board since 1994 and
Director since 1993
Martin J. Eidemiller ...... 41 Vice President since 1994, Member of the
Operating Committee and Director since
June 1998
Paul D. Clemente .......... 35 Vice President since 1997 and Member of
the Operating Committee since June 1998
Terry L. Hamilton ......... 51 President of Uniflow since 1997 and Member
of the Operating Committee since June
1998.
Scott J. Konieczny ........ 34 Secretary and Treasurer since June 1998
8
<PAGE>
In June 1998, Robert Clemente relinquished his position as president
and chief executive officer of the Company. The Company's board of directors
appointed Martin Eidemiller, Paul Clemente and Terry Hamilton to an operating
committee which, since June, has fulfilled the duties of the Company's
president.
EXECUTIVE COMPENSATION
Summary of Compensation
The following summary compensation table sets forth information
concerning cash and non-cash compensation for services in all capacities
awarded to, earned by or paid during the last three fiscal years to the
Company's Chief Executive Officer and officers whose cash compensation
exceeded One Hundred Thousand ($100,000) Dollars in any such fiscal year.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------------ Other Securities
Name and Principal Position Annual Underlying All Other
Compensation Year Salary Bonus Compensation Bonus Options (#)
- --------------------------- ---- ------ ----- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Clemente
Chairman of the Board 1998 $150,000 __ __ __ __
1997 150,000 __ __ __ __
1996 150,000 __ __ __ __
Martin J. Eidemiller
Vice President 1998 $117,500 $25,000 $15,000(1) __ __
and Member of the 1997 110,000 20,000 __ __ __
Operating Committee 1996 107,501 30,000 __ __ __
Terry Hamilton
President -- Uniflow 1998 $100,000 __ __ __ __
Corporation and Member
of the Operating
Committee
<FN>
- ----------------
(1) Paid in consideration of Mr. Eidemiller executing a noncompetition
agreement with the Company.
</TABLE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-end Option
Valued
The following table provides information on option exercises in fiscal
1998 by the Named Executive Officers and the value of such officers'
unexercised options at September 30, 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised in the Money Options
Shares Options at Fiscal Year End(#) at Fiscal Year End($)
Acquired Value ---------------------------- --------------------------
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Clemente ............. -- -- 135,000 90,000 -- --
Martin J. Eidemiller ........... -- -- 30,000 20,000 -- --
Terry Hamilton ................. -- -- -- -- -- --
</TABLE>
Compensation Pursuant to Stock Options
During fiscal 1998, no options were awarded to any of the Company's
Named Executive Officers. As of February 24, 1999, 175,000 options were
outstanding to the Company's Named Executive Officers.
1991 Non-qualified Stock Option Plan
On August 1, 1991, Secom's Board adopted a non-qualified stock option
plan (the "1991 Plan"). The 1991 Plan authorizes the Board to grant stock
options for a maximum total of 400,000 shares of Common Stock to those
employees of Secom and its subsidiaries, including officers and directors,
who have performed well in their capacities and who have potential for
assuming higher levels of responsibility with Secom. The 1991 Plan is
administered by the Board, which determines the persons
9
<PAGE>
who are to receive options and the terms of the options granted under the
1991 Plan. The option price of all options granted under the 1991 Plan shall
not be less than the fair market value of the Common Stock at the date of
grant. Under the 1991 Plan, options may be granted only during the
recipient's employment, and must be exercised within a period fixed by the
Board, which may not exceed ten (10) years from the date of grant unless
earlier terminated as a result of the termination of the recipient's
employment. However, if the recipient's employment is terminated as a result
of death, total and permanent disability, retirement after age 65 or other
reasons approved by the Board, those options may be exercised for specified
periods up to twelve (12) months after that termination. Options granted
under the 1991 Plan may not be transferred except by reason of death. The
1991 Plan provides that the Board may establish a vesting schedule with
respect to any options granted under the 1991 Plan which would limit the
exercisability of those options and/or the sale or transfer of any shares
purchased upon exercise of those options.
As of February 24, 1999, stock options for 171,000 shares were
outstanding to employees, including certain officers, pursuant to the 1991
Plan. During fiscal 1998, options to purchase shares of Common Stock were not
awarded to any of the Company's Named Executive Officers.
Compensation of Directors
The Directors of the Company do not receive compensation for attending
Board Meetings or for being Board Members. During fiscal 1998, the Board of
Directors authorized payment of $24,600 to Gregory Adamczyk, a Director of
the Company, in consideration of services he performed in completing certain
special projects. These fees were paid subsequent to September 30, 1998.
Board Compensation Committee Report on Executive Compensation
The Compensation Committee (the "Committee") was established as a
standing committee of the Board in August 1992. Its purpose is to annually
fix the salaries of the Chief Executive Officer and other Executive Officers
of the Company, determine periodic bonuses and stock options for such
executives, and administers other programs that would provide compensation to
such executives. Rocco Pollifrone and Gregory Adamczyk were appointed to the
Compensation Committee in March 1998.
General
It is the philosophy of the Committee to ensure that executive
compensation is directly linked to continuous improvement in the Company's
financial performance and stockholder value. The following objectives
represent the underlying principles which support all compensation decisions:
* Allow the Company to attract and retain quality professional talent among
its executive officer group by establishing executive compensation that is
competitive within its industry peer group.
* Integrate compensation practices that promote the successful execution of
the Company's long-term plans and goals.
* Encourage Company stock ownership by its executive officers and enhance
stockholder value through periodic stock option awards or other stock-based
compensation arrangements.
Executive compensation is reviewed on an annual basis by the Committee
in conjunction with an analysis of each individual's performance. In
addition, corporate performance is evaluated in a manner to ensure that
compensation levels support the continued focus on increasing profitability
and stockholder value. Conversely, in periods when corporate performance
goals are not achieved, the Committee may decrease the level of overall
individual compensation.
The Committee also reviews independent compensation survey information
from national and regional organizations that report compensation practices
and salary levels for various executive positions at comparably sized
companies that operate in similar lines of businesses of the Company.
10
<PAGE>
Salaries and Bonuses
The Committee's policy is to determine salaries and to award
discretionary bonuses to key employees each year based on their individual
performance and the overall performance of the Company during the immediately
preceding year. The Committee's review of individual performance of an
executive is largely a subjective test; the Committee considers the potential
of the individual executive and the executive's performance in his or her
position. In addition, the Committee consults with financial and other
professionals who have experience with respect to the compensation levels of
various executives at comparably sized companies that operate in similar
lines of business as the Company. These professionals also utilize relevant
independent compensation surveys for executive positions at comparably sized
companies. Salaries for the Company's executives generally fall near the mean
of salaries for similarly-situated companies.
The Compensation Committee generally uses different criteria in
determining each of the three components of an executive's compensation; base
salary, options and bonuses. To determine the base salary, the Compensation
Committee reviews the executive's past performance and prospects for future
performance and establishes a fair and equitable base salary. The
Compensation Committee rewards long-term performance through the granting of
stock options. The Committee believes that the issuance of stock options
provides an incentive to executives to increase the overall long-term
financial performance of the Company. Cash bonuses are used to reward the
short-term accomplishments of specific executives for favorable performance
of the business units under their management. In granting bonuses, the
Compensation Committee reviews recommendations from management, the
executive's current base salary and the overall financial condition of the
Company.
Stock Options
The Committee utilizes the 1991 Plan as a long term stock incentive
plan to compensate executives based on the Company's long term growth. Since
the option price on options granted under the 1991 Plan can not be less than
the fair market value on the date of the grant, the Committee believes that
this provides the Company's executives with the incentive to increase the
Company's earnings and increase stockholder value.
Fiscal 1998 Compensation Concerning Chief Executive Officer
In May 1998, Mr. Clemente relinquished his position as Chief Executive
Officer and the Board appointed an Operating Committee comprised of Martin
Eidemiller, Terry Hamilton and Paul Clemente to fulfill the role of CEO. As
CEO through May 1998, Mr. Clemente's base salary remained at $150,000 and he
was not paid a bonus or paid any other compensation as CEO during fiscal
1998. The Compensation Committee concluded that Mr. Clemente's salary
represented a low base salary for similar industry positions and, therefore
did not make any changes to it. Given the Company's performance Messrs.
Eidemiller and Hamilton remained at their current compensation level after
becoming members of the Operating Committee while Paul Clemente's
compensation was increased to an annual rate of $100,000 in recognition of
his increased responsibilities as a member of the Operating Committee.
Compensation Committee Interlocks and Insider Participation
Both members of the Compensation Committee are Directors. There were no
interlocks of executive officers or Board Members of the Compensation or
equivalent Committee of another entity, which has any executive officers
serving on the Compensation Committee of the Company. No executive officer of
the Company serves as a director of another entity, one of whose executive
officers served on the Compensation Committee of the Company. No executive
officer of the Company served as a member of the Compensation Committee of
another entity, one of whose executive officers served as a director of the
Company. See also "Item 13 -- Certain Relationships and Related Transactions"
herein.
Presented by: The Compensation Committee of the Board of Directors
Gregory Adamczyk
Rocco Pollifrone
11
<PAGE>
Company Performance
The following graph depicts a five (5) year comparison of cumulative
total returns, assuming $100 was invested on September 30, 1993 in (a)
Secom's Common Stock; (b) the NASDAQ Stock Market -- U.S. (as a broad equity
market index) and (c) the NASDAQ non-financial index (as a peer group index
utilizing a published industry index).
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG SECOM GENERAL CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ NON-FINANCIAL INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
Cumulative Total Return
-------------------------------------------------
9/93 9/94 9/95 9/96 9/97 9/98
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Secom General Corporation ...... 100.00 96.00 100.00 88.00 75.00 13.00
NASDAQ Stock Market (U.S.) ..... 100.00 100.83 139.28 165.24 226.81 231.84
NASDAQ Non-financial ........... 100.00 99.44 138.60 161.82 217.34 220.01
<FN>
- ---------
* $100 invested on 9/30/93 in stock or index -- including reinvestment of
dividends. Fiscal year ending September 30.
</TABLE>
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since January 1997, Robert Clemente has served in an "Of Counsel"
capacity to the law firm of Munro & Munro, PC. During fiscal 1998, Munro &
Munro was retained by the Company for professional legal services required in
the normal course of business. During fiscal 1998 the Company paid Munro &
Munro $84,000 in legal fees and expenses. Mr. Clemente does not receive any
portion of the fees paid by the Company to Munro & Munro. In addition during
1998, Mr. Clemente provided legal services to MST Steel Corp., which is owned
by Director Richard Thompson, and to Future Planning Corp., and Forward
Planning Corp., whose principal owners and officers are Directors Gregory
Adamczyk and Rocco Pollifrone.
OTHER MATTERS
As of the date of this Proxy Statement, the Board knows of no other
matters which may properly be, or are likely to be, brought before the
meeting. However, if any matters are properly brought before the meeting, the
persons named in the enclosed Proxy will vote the shares subject to Proxy as
the Board of Directors may recommend.
The Annual Meeting presentation will include an address by the Chairman
Robert A. Clemente. A general discussion period will follow, at which time
stockholders will have an opportunity to ask questions about the Company's
business and operations.
Proposals for 1999 Annual Meeting
If a stockholder desires to submit a proposal for consideration at the
next Annual Stockholders Meeting and would like to have the proposal
submitted on Secom's proxy statement and form of proxy, such written proposal
must be received by Secom no later than October 22, 1999 or 120 days before
mailing of the Proxy Statement for the next Annual Stockholders meeting,
whichever is later. The Company anticipates that it will hold its next Annual
Stockholder Meeting in April, 2000.
Annual Report and Form 10-K
All Stockholders of record on February 24, 1999 have been sent, or are
concurrently being sent, a copy of the Company's 1998 Annual Report to
Stockholders, which contains audited consolidated financial statements for
the fiscal years ended September 30, 1998, 1997 and 1996.
A copy of Secom's Annual Report on Form 10-K for the fiscal year ended
September 30, 1998 that was filed with the Securities and Exchange Commission
may be obtained without charge (except for exhibits to that Form 10-K, which
will be furnished upon payment of Secom's reasonable expenses in furnishing
those exhibits). To obtain a copy of the 1998 Form 10-K, please send a
written request to Secom General Corporation, Investor Relations, 46035 Grand
River Avenue, Novi, Michigan 48374.
By Order of the Board of Directors,
SCOTT J. KONIECZNY
Secretary
Novi, Michigan
March 22, 1999
13
<PAGE>
[PROXY CARD -- FRONT]
SECOM GENERAL CORPORATION
PROXY CARD FOR ANNUAL MEETING APRIL 12, 1999
The undersigned hereby appoints Robert A. Clemente and Scott J. Konieczny or
any one of them acting in the absence of the others, as attorneys and proxies
of the undersigned, with full power of substitution, for and in the name of
the undersigned, to represent the undersigned at the Annual Meeting of
Stockholders of Secom General Corporation, a Delaware corporation (the
"Company"), to be held at the Company's Uniflow offices, located at 46001
Grand River Avenue, Novi, Michigan 48374, at 10:00 a.m. local time on Monday,
April 12, 1999, and at any adjournment or adjournments thereof, and to vote
all shares of stock of the Company standing in the name of the undersigned,
with all of the powers the undersigned would possess if personally present at
such meeting.
1. Election of Directors [ ] FOR [ ] WITHHELD Nominees: Robert A. Clemente,
Gregory Adamczyk, Rocco Pollifrone, Richard Thompson and Martin J.
Eidemiller For all of the above, except vote withheld for the following
nominee(s):
---------------------------------------------
2. To approve an amendment to the Certificate of Incorporation of the Company
which would effect a reverse stock split at the rate of one new share for
each seven shares of currently outstanding Common Stock of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify and approve the selection of Rehmann Robson P.C. as independent
auditors for the fiscal year ending September 30, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Such other business as may properly come before the meeting or any
adjournment thereof.
(See reverse side)
[PROXY CARD BACK]
MANAGEMENT AND THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR THE
APPROVAL OF THE FOREGOING PROPOSALS.
This Proxy is solicited on behalf of the Board of Directors of the Company.
This Proxy when properly executed will be voted in the manner directed herein
by the undersigned. If no direction is made, this Proxy will be voted for the
above Proposals.
Date: ______________________________
______________________________
Signature
______________________________
Signature
NOTE: Please sign exactly as
your name appears hereon.
Joint owners should each sign.
When signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such.
