<PAGE> 1
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 (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 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):
[ ] No fee required.
[X] 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:
Common Stock, Par Value $.10 per Share
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
1,029,124
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(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):
Average of high and low prices for Secom General Corporation as of
July 11, 2000 which was $10.56.
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(4) Proposed maximum aggregate value of transaction:
10,870,122.25
--------------------------------------------------------------------------------
(5) Total fee paid:
$2,174.02
--------------------------------------------------------------------------------
[X] 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:
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(4) Date Filed:
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<PAGE> 2
[SECOM GENERAL CORPORATION LOGO]
July 24, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Secom General Corporation ("Secom") to be held at the Double Tree Hotel, Novi,
Michigan 48377, on August 24, 2000 at 10:00 a.m.
At the meeting, you will be asked to approve a Plan of Liquidation and
Dissolution for Secom. This proposal is being offered because the Board believes
that, if adopted, a Plan of Liquidation would enhance stockholder value. Because
of the uncertainties as to the precise net realizable value of our assets and
the ultimate settlement amount of our liabilities, it is impossible to predict
with certainty the aggregate net values which will ultimately be distributed to
our stockholders or the timing of distributions if the Plan of Liquidation is
approved. However, based upon information presently available to us, we believe
our stockholders could receive proceeds from a liquidation of approximately $13
per common share with the initial distribution of liquidation proceeds of
approximately $10 per common share to occur in or around October 2000. We
currently anticipate that the majority of the remaining proceeds from the
liquidation would be distributed over a period of 3 1/2 years.
The Board of Directors believes that this proposal is in the best interests
of Secom and its stockholders and urges you to vote in favor of this proposal.
The attached materials consist of a Notice of Annual Meeting of
Stockholders and a Proxy Statement describing the proposed Plan of Liquidation
and Dissolution, as well as the details as to other matters to be presented at
the meeting. You are urged to read these materials in their entirety.
The Board of Directors has fixed the close of business on June 30, 2000, as
the record date for the meeting. Only stockholders of record on that date are
entitled to notice of, and to vote at, the meeting or any adjournments or
postponements of the meeting.
Whether or not you plan to attend the meeting, we urge you to sign and
return the enclosed proxy so that your shares will be represented at the
meeting. If you so desire, you can withdraw your proxy and vote in person at the
meeting.
Sincerely,
The Board of Directors
Secom General Corporation
<PAGE> 3
NOTICE
[SECOM GENERAL CORPORATION LOGO]
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 24, 2000
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 August 24, 2000, at the Double
Tree Hotel located at 27000 Sheraton Drive, Novi, Michigan 48377, to consider
and act upon the following items of business:
1. To approve and adopt the Plan of Liquidation and Dissolution attached as
Exhibit A to the Proxy Statement.
2. To elect four directors to serve until the next annual Meeting of
Stockholders and until their successors are duly elected.
3. To ratify and approve the selection of Rehmann Robson, P.C. as independent
auditors for the fiscal year ending September 30, 2000.
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 June
30, 2000, are entitled to notice of and to vote at the meeting or any
adjournment or adjournments thereof. A list of all stockholders as of June 30,
2000, will be open for inspection at the Annual Meeting.
By Order of the Board of Directors,
/s/ Scott J. Konieczny
SCOTT J. KONIECZNY
Secretary
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING, 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 an 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
July 24, 2000
1
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Questions and Answers about the Proposals................... 4
Proxy Statement............................................. 6
Solicitation of proxies..................................... 6
Principal Stockholders...................................... 7
Security Ownership of Management.......................... 7
Proposal 1; To Approve and Adopt the Plan of
Liquidation and Dissolution............................... 9
General..................................................... 9
Background and Reasons for the Plan; Directors'
Recommendation............................................ 9
Principal Provisions of the Plan............................ 11
Cessation of Business Activities.......................... 11
Liquidation of Assets..................................... 11
Certificate of Dissolution................................ 11
Payment of Debts.......................................... 11
Distributions to Stockholders............................. 12
Powers of Board and Officers.............................. 12
Cancellation of Stock..................................... 12
Restrictions on Transfer of Shares........................ 12
Liquidating Trust......................................... 12
Compensation.............................................. 13
Indemnification........................................... 13
Estimate of Liquidation Proceeds............................ 13
Contingencies; Creditors.................................... 14
Risk of Delisting from Nasdaq............................... 14
Listing and Trading of Interests in the Liquidating Trust... 14
Absence of Appraisal Rights................................. 15
Regulation During Liquidation............................... 15
Material Federal Income Tax Consequences.................... 15
General................................................... 15
Consequences to the Company............................... 15
Consequences to the Stockholders.......................... 15
Liquidating Trust......................................... 16
Taxation of Non-United States Stockholders.................. 16
State and Local Tax....................................... 16
Description of the Company.................................. 16
Interests of Certain Persons in the Liquidation............. 17
Accounting Treatment........................................ 18
Reporting Requirements...................................... 18
Incorporation By Reference.................................. 18
Financial Statements........................................ 19
Proposal 2; Election of Directors........................... 23
Certain Information Regarding the Nominees................ 24
Directors' Committees and Meetings........................ 24
Proposal 3; Ratification of Selection of Independent Public
Accountants............................................... 24
Executive Officers.......................................... 24
Executive Compensation...................................... 25
Summary of Compensation................................... 25
Summary Compensation Table................................ 25
Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Valued................................. 25
Compensation Pursuant to Stock Options.................... 25
1991 Non-Qualified Stock Option Plan...................... 26
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C>
Compensation of Directors................................. 26
Board Compensation Committee Report on Executive
Compensation........................................... 26
General................................................... 26
Salaries and Bonuses...................................... 27
Stock Options............................................. 27
Fiscal 1999 Compensation Concerning Chief Executive
Officer................................................ 27
Compensation Committee Interlocks and Insider
Participation.......................................... 27
Company Performance....................................... 29
Comparison of 5 Year Cumulative Total Return................ 29
Certain Relationships and Related Transactions.............. 29
Other Matters............................................... 30
Proposals for 2001 Annual Meeting......................... 30
Annual Report and Form 10-K............................... 30
</TABLE>
3
<PAGE> 6
QUESTIONS AND ANSWERS ABOUT THE PROPOSALS
Q: WHAT WILL BE VOTED ON AT THE ANNUAL MEETING?
A: Three proposals will be voted on at the Annual Meeting; whether to approve
a Plan of Liquidation and Dissolution, the election of four directors, and
the ratification of the selection of our independent public accountants.
Q: WHAT WILL HAPPEN IF THE PLAN OF LIQUIDATION IS APPROVED?
A: If the Plan of Liquidation is approved, we will liquidate our remaining
assets, satisfy our remaining obligations and make distributions to our
stockholders of available liquidation proceeds.
Q: WHEN WILL THE STOCKHOLDERS RECEIVE ANY PAYMENT FROM THE LIQUIDATION OF THE
COMPANY?
A: We anticipate that an initial distribution of liquidation proceeds will be
made to the stockholders in or around October 2000. Thereafter, as we
liquidate our remaining assets and properties we will distribute available
liquidation proceeds to stockholders as the Board deems appropriate. We
anticipate that the majority of the remaining liquidation proceeds will be
distributed over a period of 3 1/2 years.
Q: WHAT IS THE AMOUNT OF THE PAYMENT THAT STOCKHOLDERS WILL RECEIVE FROM THE
LIQUIDATION OF THE COMPANY?
A: Because of the uncertainties as to the precise net realizable value of our
assets and the ultimate settlement amount of our liabilities, it is
impossible to predict with certainty the aggregate net values which will
ultimately be distributed to our stockholders. However, based upon
information presently available to us, we believe our stockholders could,
over time, receive proceeds from a liquidation of approximately $13 per
common share with the initial distribution of liquidation proceeds
approximating $10 per common share.
Q: WHAT DO THE COMPANY STOCKHOLDERS NEED TO DO NOW?
A: After carefully reading and considering the information contained in this
Proxy Statement, each Secom stockholder should complete and sign his or her
proxy and return it in the enclosed return envelope as soon as possible so
that his or her shares may be represented at the meeting. A majority of
shares entitled to vote must be represented at the meeting to enable Secom
to conduct business at the meeting.
Q: CAN THE COMPANY STOCKHOLDERS CHANGE THEIR VOTE AFTER THEY HAVE MAILED THEIR
SIGNED PROXIES?
A: Yes. A stockholder can change his or her vote at any time before proxies
are voted at the meeting. Each stockholder can change his or her vote in
one of three ways. First, a stockholder can send a written notice to our
Secretary, Scott Konieczny, at our executive offices, stating that he or
she would like to revoke his or her proxy. Second, a stockholder can
complete and submit a new proxy. If a stockholder chooses either of these
two methods, he or she must submit the notice of revocation or the new
proxy to the Company. Third, a stockholder can attend the meeting and vote
in person.
Q: IF THE COMPANY SHARES ARE HELD IN "STREET NAME" BY A STOCKHOLDER'S BROKER,
WILL THE BROKER VOTE THESE SHARES ON BEHALF OF THE STOCKHOLDER?
A: A broker will vote Company shares only if the holder of these shares
provides the broker with instructions on how to vote. Stockholders should
follow the directions provided by their brokers regarding how to instruct
brokers to vote the shares.
Q: CAN I STILL SELL MY SHARES OF COMPANY COMMON STOCK?
A: If the Plan of Liquidation is approved by the stockholders, it is likely
that we will not be able to maintain continued compliance with Nasdaq's
listing requirements or that Nasdaq will take action to delist our
securities from their Smallcap Market System. If our Common Stock is
delisted from Nasdaq, trading, if any, would thereafter be conducted on the
over-the-counter market in the so-called "pink sheets" or on the
"Electronic Bulletin Board" of the National Association of Securities
Dealers, Inc. Consequently, stockholders may find it more difficult to
dispose of, or to obtain accurate quotations as to the price of the
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<PAGE> 7
Common Stock. In addition, it is likely that we will restrict transfers of
our Common Stock after filing the certificate of dissolution with the State
of Delaware.
Q: WHO CAN HELP ANSWER QUESTIONS?
A: If you have any additional questions about the proposed Plan of Liquidation
or if you need additional copies of this Proxy Statement or any public
filings referred to in this Proxy Statement, you should contact: SCOTT
KONIECZNY, CHIEF FINANCIAL OFFICER AT (248) 305-9410. Our public filings
can also be accessed at the SEC's web site at www.sec.gov.
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<PAGE> 8
PROXY STATEMENT
[SECOM GENERAL CORPORATION LOGO]
SOLICITATION OF PROXIES
The enclosed Proxy is solicited by our Board of Directors for purposes set
forth in this Notice for Annual Meeting of Stockholders (the "Annual Meeting" or
"Meeting") of Secom General Corporation. The terms "we," "our," "Secom" and the
"Company" as used in this Proxy Statement refers to Secom General Corporation
and, if applicable, its subsidiaries. The term "you" refers to the stockholders
of Secom General Corporation. The solicitation is being made by mail and we may
also use our officers and regular employees to solicit proxies from stockholders
either in person or by telephone, facsimile or letter without additional
compensation. We 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
our Common Stock.
Our Common Stock is the only outstanding class of voting securities. Each
stockholder of record at the close of business on June 30, 2000, (the "record
date") is entitled to vote at the Meeting. As of the close of business on the
record date, there were 1,029,124 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 us or our transfer agent, American Stock Transfer and
Trust Company ("Transfer Agent"), and properly executed will be voted in
accordance with stockholders' instructions. You specify your choice by
appropriately marking the enclosed Proxy card. Brokers holding shares for the
account of their clients may vote such shares in the manner directed by their
clients. 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
our Board. 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 your right to attend the
Meeting and vote in person. You have the right to revoke your Proxy prior to the
Meeting by giving notice to our Secretary, Scott Konieczny, at our executive
offices. You may also complete and submit a new proxy prior to the Meeting or
you may revoke a previously submitted proxy at the Meeting by giving notice to
our Secretary at the Meeting.
For convenience in voting your shares on the enclosed Proxy card, we have
enclosed a postage-paid return envelope to our Transfer Agent who will assist in
tabulating the stockholder vote. Secom's mailing address is 46035 Grand River
Avenue, Novi, Michigan 48374, our 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 July 24, 2000.
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<PAGE> 9
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 June 30, 2000 record date.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OWNED(1)
------------------- -------------------- ----------------
<S> <C> <C>
Manubusiness Opportunities, Inc.
c/o 24417 Groesbeck Highway
Warren, Michigan 48089.................................... 326,085(1) 31.69%
John Cocke
46657 Arboretum
Plymouth, Michigan 48170.................................. 82,146 7.98%
Secom General Corporation 401(k) Plan
46035 Grand River Avenue
Novi, Michigan 48374...................................... 79,013(2) 7.68%
</TABLE>
---------------------
(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.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED AS OF
NAME JUNE 30, 2000(1) PERCENT OWNED(2)
---- ------------------------ ----------------
<S> <C> <C>
Robert A. Clemente.................................... 60,537(3)(5) 5.68%
Gregory Adamczyk...................................... 64,238(3)(6) 6.24%
Rocco Pollifrone...................................... 22,826(3)(7) 2.22%
Richard Thompson...................................... 110,570(3)(8) 10.74%
Martin J. Eidemiller.................................. 13,569(3)(9) 1.30%
Paul D. Clemente...................................... 1,701(4)(10) *
Scott J. Konieczny.................................... 2,161(4)(11) *
Current Directors and Officers as a Group (totaling
7).................................................. 275,602(12) 25.63%
</TABLE>
---------------------
* Less than 1% of the outstanding shares.
(1) To the best of our knowledge based on information reported by the directors
or executive officers or contained in our stockholder 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
7
<PAGE> 10
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 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) A Named Executive Officer of the Company. The address for all officers is
c/o Secom General Corporation, 46035 Grand River Avenue, Novi, Michigan
48374.
(5) Includes (a) 36,000 shares which Mr. Clemente has the right to acquire
within 60 days pursuant to the exercise of stock options, and (b) 9,708
shares which represents 47.9% of the 20,268 shares beneficially owned by
Career Opportunities, a partnership of which Mr. Clemente is a general
partner.
(6) Represents 19.7% of the 326,085 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."
(7) Represents 7% of the 326,085 shares that are beneficially owned by MOI, as
Mr. Pollifrone owns 7% of the Common Stock of MOI. See "Principal
Stockholders -- Manubusiness Opportunities, Inc."
(8) Includes (a) 100,010 shares which represents 30.67% of the 326,085 shares
that are beneficially owned by MOI, as Mr. Thompson owns 30.67% of the
Common Stock of MOI, and (b) 10,560 shares which represents 52.1% of the
20,268 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 3,311 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."
(9) Includes 8,000 shares of Common Stock which Mr. Eidemiller has the right to
acquire within 60 days pursuant to the exercise of stock options.
(10) Includes 1,600 shares of Common Stock which Mr. Clemente has the right to
acquire within 60 days pursuant to the exercise of stock options.
(11) Includes 1,200 shares of Common Stock which Mr. Konieczny has the right to
acquire within 60 days pursuant to the exercise of stock options.
(12) Shares shown as beneficially owned by more than one director or officer are
included only once in the total.
8
<PAGE> 11
PROPOSAL 1
TO APPROVE AND ADOPT THE PLAN OF
LIQUIDATION AND DISSOLUTION
GENERAL
Our Board of Directors is proposing the Plan of Liquidation and Dissolution
(the "Plan") for approval by our stockholders at the Annual Meeting. The Plan
was adopted by the Board of Directors, subject to stockholder approval, on July
1, 2000. A copy of the Plan is attached as Exhibit A to this Proxy Statement.
Certain material features of the Plan are summarized below. STOCKHOLDERS SHOULD
READ THE PLAN IN ITS ENTIRETY.
Our Board of Directors executed written consent resolutions dated July 1,
2000 which authorized, subject to stockholder approval, the orderly liquidation
of the Company's assets pursuant to the Plan. The Plan provides that, if the
requisite stockholder approval is received (such time of approval deemed the
"Effective Date"), our officers and directors will initiate the complete
liquidation and subsequent dissolution of the Company. After the Effective Date,
we will not engage in any business activities except for the purpose of
preserving the value of our assets, prosecuting and defending suits by or
against us or our subsidiaries, adjusting and winding up our business and
affairs, selling and liquidating our properties and assets, including our
intellectual property and other intangible assets, paying our creditors and
making distributions to stockholders, in accordance with the Plan. In addition,
after the Effective Date, we will file a certificate of dissolution with the
Secretary of State of the State of Delaware (the "Secretary of State").
Our Board of Directors may, at any time, transfer to a liquidating trust
our remaining assets to complete the liquidation and distribution of our assets
to our stockholders pursuant to the Plan. The liquidating trust would then
succeed to all of the assets, liabilities and obligations of the Company. Our
Board of Directors may appoint one or more of its members to act as trustee or
trustees of such liquidating trust. If, however, all of our assets are not
distributed within three years after the date our certificate of dissolution is
filed with the State of Delaware, we will transfer our remaining assets to a
liquidating trust. Your approval of the Plan will also constitute your approval
of any appointment and compensation of such trustees.
During the liquidation of our assets, we may pay to our officers,
directors, employees, and agents, or any of them, compensation for services
rendered in connection with the implementation of the Plan. Your approval of the
Plan will constitute your approval of the payment of any such compensation.
The following resolution will be offered at the Annual Meeting:
"RESOLVED, THAT THE PLAN OF LIQUIDATION AND DISSOLUTION RECOMMENDED BY
THE BOARD OF DIRECTORS BE AUTHORIZED AND APPROVED."
BACKGROUND AND REASONS FOR THE PLAN;
DIRECTORS' RECOMMENDATION
During the fall of 1998, our Board of Directors engaged the investment
banking firm of Goldsmith, Agio, Helms Securities, Inc. ("GAHS") to assist us in
developing strategic alternatives to increase stockholder value. Our Board
initially contacted GAHS because it believed that the value of the Company was
greater than the aggregate value of the then trading price of our shares of
Common Stock. Among the alternatives discussed with GAHS was a possible merger,
sale or similar transaction of the entire Company or its subsidiaries. While
other parties expressed an interest in engaging in a transaction with the entire
Company, the price proposed by such parties was below what our Board believed
was fair market value. GAHS also advised our Board that, because of the
different industries represented by our two segments, many potential purchasers
would not be interested in purchasing both segments. Therefore, our Board
believed it was necessary to pursue other alternatives to accomplish its goal of
increasing stockholder value, including selling our assets and properties in
separate transactions and ultimately liquidating the Company.
9
<PAGE> 12
In August 1999, we entered into a letter of intent with a potential
purchaser for the sale of the assets of the Tooling Segment, which was comprised
of Form Flow, Inc. ("Form Flow"), L&H Die, Inc. ("L&H"), and Micanol, Inc.
("Micanol"). After signing the letter of intent, the potential purchaser asked
us for certain concessions on the terms which we were unwilling to provide. The
letter of intent also contained certain contingencies that were not satisfied so
the letter of intent terminated.
At the same time, we were negotiating with Alken-Ziegler Livonia, LLC
("Alken-Ziegler") for the sale of the operating assets of the Metal Parts
Forming Segment, which was comprised of Uniflow Corporation. We ultimately
entered into a letter of intent for that sale in October 1999. When the letter
of intent with respect to the Tooling Segment terminated, Alken-Ziegler
expressed interest in purchasing the assets of the Tooling Segment. In November
1999, our Board authorized execution of a non-binding letter of intent with
Alken-Ziegler for the sale of the assets of the Tooling Segment. At that time,
however, we believed that it was in the Company's best interest to focus on
closing the sale of the Metal Parts Forming Segment before entering into a
definitive agreement for the sale of the assets of the Tooling Segment.
On February 9, 2000, we sold the operating assets of our Metal Parts
Forming Segment to Alken-Ziegler for a purchase price of approximately $2.4
million in cash. Alken-Ziegler also agreed to assume certain liabilities of the
Metal Parts Forming Segment. (For a detailed description of that transaction,
please see the Company's Form 8-K dated February 9, 2000, incorporated herein by
reference and made a part hereof). We then began negotiating with Alken-Ziegler
and GL Ziegler Investments, LLC ("GLZ") on the terms of a definitive agreement
for the sale of the assets of the Tooling Segment.
On March 29, 2000, our Board authorized the execution of an Asset Purchase
Agreement with GLZ and Alken-Ziegler. On May 10, 2000, the sale of the Tooling
Group was approved by the written consent of more than fifty-one (51%) percent
of the outstanding shares of our Common Stock. Prior to the closing, Alken-
Ziegler assigned its interests under the Asset Purchase Agreement to its
affiliate, Alken-Ziegler Tool Company, LLC ("A-Z Tool Company"; A-Z Tool Company
and GLZ are collectively referred to as "Purchaser"). The sale was completed on
June 30, 2000. In connection with the sale of the operating assets of the
Tooling Segment, we received a cash purchase price of approximately $8 million
on June 30, 2000. We expect to receive a cash payment of approximately $1.6
million for the sale of the real estate on or before July 31, 2000. The
Purchaser also agreed to assume certain liabilities of the Tooling Segment. (For
a detailed description of that transaction, please see the Company's Information
Statement on Form 14C dated May 24, 2000, incorporated herein by reference and
made a part hereof).
In a separate transaction in April 2000, we sold one of our manufacturing
facilities in Novi, Michigan for $1.2 million. Our three remaining manufacturing
facilities in Novi, Michigan are currently held for sale at an aggregate
purchase price of $2.75 million.
By completing these business sales and, if we are successful in liquidating
our remaining assets at their current market value, the Board believes that,
after reserving sufficient funds to pay our debts as they come due, the
stockholders could, over time, receive a liquidating distribution of
approximately $13 per share. Given that the market value of our Common Stock on
March 29, 2000 was $4.50 per share (as reported by the NASDAQ Smallcap Market),
the Board believes that liquidation is the best alternative in maximizing
stockholder value.
Considering the foregoing, our Board of Directors believes that the
liquidation and dissolution of Secom would enhance stockholder value and is in
the best interests of our stockholders.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS VOTE "FOR" APPROVAL OF THE PLAN AS DESCRIBED IN PROPOSAL 1
THIS PROXY STATEMENT AND THE LETTER TO STOCKHOLDERS CONTAIN STATEMENTS THAT
ARE NOT BASED ON HISTORICAL FACT AND ARE "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. AMONG OTHER
THINGS, THEY REGARD THE COMPANY'S LIQUIDITY, FINANCIAL CONDITION, OPERATIONAL
MATTERS, CERTAIN STRATEGIC INITIATIVES AND ALTERNATIVES AND THEIR POTENTIAL
OUTCOMES AND THE POTENTIAL VALUE OF THE COMPANY'S PROPERTY AND ASSETS. WORDS OR
PHRASES DENOTING THE ANTICIPATED RESULTS OF
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FUTURE EVENTS, SUCH AS "ANTICIPATE," "BELIEVE," "ESTIMATE," "EXPECTS," "MAY,"
"NOT CONSIDERED LIKELY," "ARE EXPECTED TO," "WILL CONTINUE," "PROJECT," "COULD,"
AND SIMILAR EXPRESSIONS THAT DENOTE UNCERTAINTY ARE INTENDED TO IDENTIFY SUCH
FORWARD-LOOKING STATEMENTS. THE METHODS USED BY THE BOARD OF DIRECTORS AND
MANAGEMENT IN ESTIMATING THE VALUE OF THE COMPANY'S PROPERTY AND ASSETS DO NOT,
WITH CERTAINTY, RESULT IN AN EXACT DETERMINATION OF VALUE NOR ARE THEY INTENDED
TO INDICATE THE AMOUNT, IF ANY, A STOCKHOLDER MAY RECEIVE IN LIQUIDATION. THE
AMOUNT OF THE LIQUIDATION PROCEEDS DEPEND LARGELY ON FACTORS BEYOND THE
COMPANY'S CONTROL, INCLUDING, WITHOUT LIMITATION, THE PRICE AT WHICH THE COMPANY
WILL BE ABLE TO SELL ITS REMAINING ASSETS AND PROPERTIES, THE RATE OF INFLATION,
CHANGES IN INTEREST RATES, THE CONDITION OF REAL ESTATE AND FINANCIAL MARKETS,
THE AVAILABILITY OF FINANCING TO PROSPECTIVE PURCHASERS, THE TIMING OF THE SALE
OF OUR REMAINING ASSETS, THE AMOUNT AND NATURE OF ANY UNKNOWN CONTINGENT
LIABILITIES, AND THE ABILITY TO COLLECT OUR RECEIVABLES.
If the Plan is not approved by the stockholders, the Board of Directors
will explore the alternatives then available for the future of the Company.
PRINCIPAL PROVISIONS OF THE PLAN
CESSATION OF BUSINESS ACTIVITIES
Pursuant to the Plan, after the Effective Date, we will not engage in any
business activities except for the purpose of preserving the value of our
assets, prosecuting and defending suits by or against us, adjusting and winding
up our business and affairs, selling and liquidating our properties and assets
and making distributions to stockholders in accordance with the Plan.
LIQUIDATION OF ASSETS
After the Effective Date, as provided for in the Plan, we will sell,
transfer, or otherwise dispose of all of our property and assets, including our
intellectual property and other intangible assets, to the extent, for such
consideration and upon such terms and conditions as our Board of Directors deems
expedient and in the best interests of the Company, and its stockholders,
without the requirement of further vote or action by you. Our remaining assets
and properties may be sold in bulk to one buyer or a small number of buyers or
on a piecemeal basis to numerous buyers. We will not be required to obtain
appraisals or other third party opinions as to the value of our properties and
assets in connection with the liquidation. As part of the liquidation of our
property and assets, we will collect, or make provision for the collection of,
all accounts receivable, debts and claims owing to the Company.
CERTIFICATE OF DISSOLUTION
At such time as the Board of Directors determines, in its discretion, to be
appropriate after the Effective Date, the officers of the Company will execute
and file with the Secretary of State, a certificate of dissolution conforming to
the requirements of Section 275 of the Delaware General Corporate Law ("DGCL")
(the "Certificate of Dissolution"). From and after the date such documents are
accepted by the Secretary of State, the Company will be deemed to be completely
dissolved, but will continue to exist under Delaware law for the purposes of
paying, satisfying and discharging any existing debts or obligations, collecting
and distributing its assets, and doing all other acts required to liquidate and
wind up the Company's business affairs. The members of the Board of Directors in
office at the time the Certificate of Dissolution is accepted for filing by the
Secretary of State will have all powers provided to them under the DGCL and
other applicable law.
PAYMENT OF DEBTS
Prior to making any distributions to our stockholders, we will pay, or as
determined by the Board of Directors, make reasonable provision to pay, all our
claims and obligations, including all contingent, conditional or unmatured
claims known to us. Following the Effective Date, the Board of Directors may
establish a contingency reserve (the "Contingency Reserve") and set aside into
the Contingency Reserve such amounts of our cash or property as our Board of
Directors, in its discretion, determines is sufficient to account
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for unknown events, claims, contingencies and expenses incurred in connection
with the collection and defense of our property and assets and the liquidation
and dissolution provided for in the Plan. Following the payment, satisfaction or
other resolution of all such events, claims, contingencies and expenses, any
amounts remaining in the Contingency Reserve shall be distributed in accordance
with the Plan.
DISTRIBUTIONS TO STOCKHOLDERS
Following the payment or the provision for the payment of our claims and
obligations, we will distribute pro rata to the holders of the Common Stock all
of our remaining property and assets, in one or a series of distributions.
POWERS OF BOARD AND OFFICERS
Our Board of Directors and the officers are authorized to approve such
changes to the terms of any of the actions referred to in the Plan, to interpret
any of the provisions of the Plan, and to make, execute and deliver such other
agreements, conveyances, assignments, transfers, certificates and other
documents and take such other action as our Board of Directors and the officers
deem necessary or desirable in order to carry out the provisions of the Plan and
effect the complete liquidation and dissolution of the Company in accordance
with the DGCL and any rules and regulations of the Securities and Exchange
Commission or any state securities commission.
CANCELLATION OF STOCK
The distributions to our stockholders pursuant to the Plan will be in
complete redemption and cancellation of all of the outstanding Common Stock. As
a condition to any disbursement made under the Plan after the filing of the
Certificate of Dissolution, the Board of Directors may require stockholders to
surrender their certificates evidencing the Common Stock to us or our agent for
cancellation. If a stockholder's certificate for shares of Common Stock has been
lost, stolen or destroyed, such stockholder may be required, as a condition to
the disbursement of any distribution under the Plan, to furnish to us or our
agent satisfactory evidence of the loss, theft or destruction thereof, together
with a surety bond or other security or indemnity reasonably satisfactory to us.
RESTRICTIONS ON TRANSFER OF SHARES
The Company will close its stock transfer books and discontinue recording
transfers of Common Stock at the close of business on the record date fixed by
the Board for filing the Certificate of Dissolution (the "Dissolution Record
Date"). Thereafter, certificates representing the Common Stock shall not be
assignable or transferable on the books of the Company except by will, intestate
succession or operation of law. The proportionate interests of all of the
stockholders of the Company shall be fixed on the basis of their respective
stock holdings at the close of business on the Dissolution Record Date, and,
after the Dissolution Record Date, any distributions made by the Company shall
be made solely to the stockholders of record at the close of business on the
Dissolution Record Date, except as may be necessary to reflect subsequent
transfers recorded on the books of the Company as a result of any assignments by
will, intestate succession or operation of law.
LIQUIDATING TRUST
If advisable for any reason to complete the liquidation and distribution of
the our assets to our stockholders, our Board of Directors may at any time
transfer to a liquidating trust (the "Liquidating Trust") our remaining assets
and obligations. The Liquidating Trust thereupon will succeed to all of our then
remaining assets, including all amounts in the Contingency Reserve, and any of
our remaining liabilities and obligations. However, if all of our assets are not
distributed within three years after the date our Certificate of Dissolution is
filed with the State of Delaware, we will transfer all of our remaining assets
to the Liquidating Trust. The sole purpose of the Liquidating Trust will be to
prosecute and defend suits by or against us, to collect amounts, settle and
close our business, to dispose of and convey our assets, to satisfy our
remaining liabilities and obligations and to distribute our remaining assets to
our stockholders. Any distributions made
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from the Liquidating Trust will be made in accordance with the provisions of the
Plan. Our Board of Directors may appoint one or more of its members to act as
trustee or trustees of the Liquidating Trust and to cause the Company to enter
into a liquidating trust agreement with such trustee or trustees on such terms
and conditions as the Board of Directors determines appropriate. Approval of the
Plan by the stockholders also will constitute the approval by the stockholders
of any appointment of the trustees and of the liquidating trust agreement
between the Company and such trustees.
COMPENSATION
We may pay to our officers, directors, employees, agents, and trustees, or
any of them, compensation for services rendered in connection with the
implementation of the Plan. Further, if deemed advisable by our Board of
Directors, we may pay a "wind-down" consultant reasonable compensation for
services rendered in connection with our liquidation and dissolution.
We presently employ three persons (including Robert A. Clemente, Chairman,
Paul D. Clemente, Vice-President, and Scott J. Konieczny, Chief Financial
Officer, as officers of the Company) who will implement and conduct the
liquidation of our assets as set forth in the Plan. Approval of the Plan by our
stockholders will constitute the approval of the stockholders of the payment of
any compensation to the above employees.
INDEMNIFICATION
We will continue to indemnify our officers, directors, employees and agents
in accordance with our Certificate of Incorporation, bylaws and any contractual
arrangements as therein or elsewhere provided, and such indemnification shall
apply to acts or omissions of such persons in connection with the implementation
of the Plan and the winding up of our affairs. Our obligation to indemnify such
persons may be satisfied out of the Contingency Reserve or out of assets
transferred to the Liquidating Trust, if any. Our Board of Directors and the
trustees of any Liquidating Trust are authorized to obtain and maintain
insurance as may be necessary to cover our indemnification obligations.
ESTIMATE OF LIQUIDATION PROCEEDS
Our Board of Directors will determine, in its sole discretion and in
accordance with applicable law, the timing of, the amount, the kind of and the
record dates for all distributions made to stockholders. Although our Board of
Directors has not established a firm timetable for distributions to
stockholders, after the Plan of Liquidation has been approved, our Board will,
subject to exigencies inherent in winding up our business, make such
distributions as promptly as practicable.
Because of the uncertainties as to the precise net realizable value of our
assets and the ultimate amount of our liabilities, it is impossible to predict
with certainty the aggregate net values which will ultimately be distributed to
stockholders or the timing of distributions. Based upon information presently
available to us, we believe our common stockholders could, over time, receive
proceeds from a liquidation of approximately $13 per common share with the
initial distribution approximating $10 per common share. We currently anticipate
that our Board will set a record date for the first distribution of liquidation
proceeds in or around October 2000 with the majority of the remaining
liquidation proceeds distributed over a period of 3 1/2 years.
As of June 30, 2000, we hold the following material net assets:
- Cash proceeds from the sale of the Tooling Segment approximating $8 million
with the balance of approximately $1.6 million to be paid in cash on or before
July 31, 2000 (before payment of federal and state taxes and other expenses
which are currently estimated at $2 million);
- Accounts receivable and accounts payable and accrued liabilities of the
Tooling Segment (estimated net asset amount of approximately $1 million);
- A promissory note from Delco Remy America currently valued at approximately
$1.2 million. (See the Company's Form 8-K, dated October 27, 1998,
incorporated herein by reference and made a part hereof, for a description of
the transaction underlying this promissory note);
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- A promissory note from Horizon Technology, L.L.C. currently valued at
approximately $400,000. (See the Company's Form 8-K, dated March 18, 1998,
incorporated herein by reference and made a part hereof, for a description of
the transaction underlying this promissory note);
- Three industrial plants in the City of Novi, Michigan which are being held for
sale and which we believe will have an aggregate net value of approximately $1
million at the time of such sale;
- Other cash and cash equivalents approximating $3 million; and
- Miscellaneous royalty rights from Alken-Ziegler Livonia, LLC and Horizon
Technology, L.L.C.
CONTINGENCIES; CREDITORS
Under the DGCL, in the event we fail to create an adequate Contingency
Reserve for payment of our expenses and liabilities, or should such Contingency
Reserve and the assets held by a Liquidating Trust be exceeded by the amount
ultimately found payable in respect of expenses and liabilities, each
stockholder could be held liable for the payment to creditors of such
stockholder's pro rata share of such excess. However, each stockholder's
liability is limited to only such stockholder's pro rata share of amounts
received by such stockholder from the Company or a Liquidating Trust.
If we were held by a court to have failed to make adequate provision for
our expenses and liabilities or if the amount ultimately required to be paid in
respect of such liabilities exceeded the amount available from the Contingency
Reserve and the assets of the Liquidating Trust, a creditor of the Company could
seek an injunction against the making of distributions under the Plan on the
ground that the amounts to be distributed were needed to provide for the payment
of our expenses and liabilities. Any such action could delay or substantially
diminish the distributions, if any, to be made to stockholders and/or interest
holders under the Plan.
RISK OF DELISTING FROM NASDAQ
If the Plan of Liquidation is approved by the stockholders, it is likely
that we will not be able to maintain continued compliance with Nasdaq's listing
requirements or that Nasdaq will take action to delist our securities from their
Smallcap Market System. If our Common Stock is delisted from Nasdaq, trading, if
any, would thereafter be conducted on the over-the-counter market in the
so-called "pink sheets" or on the "Electronic Bulletin Board" of the National
Association of Securities Dealers, Inc. Consequently, you may find it more
difficult to dispose of, or to obtain accurate quotations as to the price of the
Common Stock.
In addition, we currently intend to close our stock transfer books on the
Dissolution Record Date and at such time cease recording stock transfers and
issuing stock certificates (other than replacement certificates). Accordingly,
it is expected that trading in the shares will cease on and after such date.
LISTING AND TRADING OF
INTERESTS IN THE LIQUIDATING TRUST
It is anticipated that the interests in the Liquidating Trust, if one is
created, will not be transferable. The interests may not be accepted by
commercial lenders as security for loans as readily as more conventional
securities with established trading markets.
Because stockholders will be deemed to have received a liquidating
distribution equal to their pro rata share of the value of the net assets
distributed to an entity which is treated as a liquidating trust for tax
purposes (see "Material Federal Income Tax Consequences -- Liquidating Trust"),
the distribution of non-transferable interests could result in tax liability to
the interest holders without their being readily able to realize the value of
such interests to pay such taxes or otherwise.
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ABSENCE OF APPRAISAL RIGHTS
Under the DGCL, our stockholders are not entitled to appraisal rights or to
any similar rights of dissenters for their shares of Common Stock in connection
with the approval or consummation of the transactions contemplated by the Plan.
REGULATION DURING LIQUIDATION
Except for filing of the Certificate of Dissolution and compliance by the
Company with the applicable rules and regulations of the Securities and Exchange
Commission, no United States federal or state regulatory requirements must be
complied with or approvals obtained in connection with the liquidation.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following discussion is a general summary of the federal income tax
consequences that may result from our liquidation and the distribution of our
assets to our stockholders pursuant to the Plan and in accordance with the
provisions of the Internal Revenue Code as currently in force. This summary does
not discuss all aspects of federal income taxation that may be relevant to a
particular stockholder or to certain types of persons subject to special
treatment under federal income tax laws (for example, life insurance companies,
tax-exempt organizations or financial institutions) and does not discuss any
aspects of state, local or foreign tax laws that may apply to a particular
stockholder. Because distributions pursuant to the Plan may occur at various
times and in more than one tax year, no assurances can be given that the tax
treatment described herein will continue to apply unchanged at the time of later
distributions. STOCKHOLDERS ARE URGED TO CONSULT THEIR PERSONAL TAX ADVISORS AS
TO THEIR OWN TAX SITUATION.
CONSEQUENCES TO THE COMPANY
After adoption of the Plan, we will continue to be subject to federal
income tax on our income until we complete the distribution of all of our cash
and other properties to stockholders or liquidating trusts.
CONSEQUENCES TO THE STOCKHOLDERS
If we make liquidating distributions with respect to our outstanding Common
Stock, each stockholder may recognize gain or loss equal to the difference
between (i) the sum of the amount of cash distributed to such stockholder, and
(ii) the stockholder's tax basis in his or her shares of Common Stock. Provided
the stockholder holds the shares of Common Stock as capital assets, gain or loss
recognized by a stockholder will be capital gain or loss and will be long-term
if the stockholder's holding period for the shares of Common Stock is more than
one year, and short-term if such holding period is one year or less.
If our assets are insufficient to permit us to make liquidating
distributions with respect to our outstanding Common Stock, each stockholder may
be entitled to claim a loss to the extent of that stockholder's tax basis at the
time it becomes certain that no such distributions will be made. Provided the
stockholder holds the shares of Common Stock as capital assets, the loss will be
a capital loss limited to each stockholder's basis in the Common Stock and will
be long-term if the stockholder's holding period for such shares of Common Stock
is more than one year, and short-term if such holding period is one year or
less.
A stockholder's gain or loss will be computed on a "per share" basis. Each
stockholder must allocate liquidating distributions from the Company, if any,
equally to each share of Common Stock and compare the allocated portion of each
liquidating distribution with the stockholder's tax basis in each such share.
Because it is likely that any liquidating distributions will be paid in
installments, each stockholder must first recover the stockholder's tax basis in
each share before recognizing any gain or loss. Thus, each stockholder may
recognize gain on an installment only to the extent that the aggregate value of
the installment, and all prior installments the stockholder received with
respect to any share of Common Stock, exceeds the tax basis in that share, and
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may recognize a loss with respect to any share of Common Stock only when the
stockholder has received the final installment and the aggregate value of all
liquidating distributions from the Company with respect to that share of Common
Stock is less than the stockholder's tax basis in such share.
LIQUIDATING TRUST
If we transfer our assets to a Liquidating Trust, the stockholders may be
treated for tax purposes as having received their pro rata share of those
Company assets when the transfer occurs. The amount of the taxable distribution
to the stockholders on the transfer of the Company's assets to the Liquidating
Trust would be reduced by the amount of the Company's known liabilities which
the Liquidating Trust assumes or to which such transferred assets are subject.
The Liquidating Trust itself generally will not be subject to tax. After the
formation of the Liquidating Trust, each stockholder would take into account for
federal income tax purposes the stockholder's allocable portion of any income,
gain, deduction or loss which the Liquidating Trust recognizes. Distributions by
the Liquidating Trust to the stockholders may not be taxable to them. Each
stockholder may become liable for tax as a result of the ongoing operations of
the Liquidating Trust, even if the Liquidating Trust has not made any actual
distributions to stockholders.
TAXATION OF NON-UNITED STATES STOCKHOLDERS
Foreign corporations or persons who are not citizens or residents of the
United States should consult their tax advisors with respect to the U.S. and
non-U.S. tax consequences of the Plan.
STATE AND LOCAL TAX
Stockholders may also be subject to state or local taxes, and should
consult their tax advisors with respect to the state and local tax consequences.
THE FORGOING SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS INCLUDED FOR
GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE TO ANY
STOCKHOLDER. THE TAX CONSEQUENCES OF THE PLAN MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCES OF THE STOCKHOLDER. THE COMPANY RECOMMENDS THAT EACH
STOCKHOLDER CONSULT HIS OR HER OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF
THE PLAN.
DESCRIPTION OF THE COMPANY
We are a holding company with four wholly owned subsidiaries: Form Flow,
L&H, and Micanol (which collectively comprise the Tooling Segment) and Uniflow
(which comprises the Metal Parts Forming Segment). In July 1998, we
significantly reduced the size of Micanol by selling certain equipment and
transferring the remaining assets and business to L&H. In June 2000, we sold
substantially all of the operating assets of the Tooling Segment to Purchaser
for a purchase price of $9.6 million of which approximately $8 million was
received in cash on June 30, 2000 with the balance to be paid in cash on or
before July 31, 2000. Effective with the sale of the Tooling Segment, we no
longer have any operating entities. The sale of the Tooling Segment is more
fully described in our Information Statement dated May 26, 2000.
The operating assets of the Metal Parts Forming Segment were sold on
February 9, 2000 to Alken-Ziegler pursuant to an Asset Purchase Agreement dated
February 1, 2000 among Alken-Ziegler, as purchaser, and the Company and Uniflow,
as sellers. Alken-Ziegler paid a purchase price of approximately $2.4 million in
cash and agreed to assume Uniflow's obligations under this collective bargaining
agreement with the UAW. The sale of Uniflow's assets is more fully described in
the Company's Form 8-K dated February 9, 2000, which is incorporated herein by
reference and made a part hereof.
Prior to its sale, the Tooling Segment manufactured close tolerance tooling
for the hot and cold metal forming industry. Hot and cold metal forming
companies typically make metal parts from steel coil that is automatically fed
through various stations on a "header forming" machine. A header machine cuts
steel coil and moves it through each die station progressively, using tool
inserts to form the part. Tool life is dependent on the type of material used to
make the part and the size and shape of the part, among other things.
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As part of its sales and service, the Tooling Segment's design and
development staff advised customers about tooling issues and other engineering
matters related to the production of hot and cold formed parts. Tool orders
(without design services) typically can take 4 to 10 weeks to complete, while
design and development orders can span over a period of months.
The Tooling Segment's customers were numerous and covered a wide variety of
industries. The Tooling Segment's customers manufacture items such as industrial
fasteners, hand tools, automotive parts, tubing, consumer items, munitions and a
wide array of OEM assembly parts. The Tooling Segment's customers include OEM
and aftermarket suppliers and are predominantly related to the automotive
industry. Continuing customer relations are important, as significant revenue is
derived from tooling reorders.
The Tooling Segment operated in fragmented markets with numerous
competitors. Generally, independent competitors are smaller companies ranging in
size from 10 employees to up to 100 employees. The Tooling Segment also competed
with its customers' internal tooling capabilities, as customers typically have
their own tool facilities to support production. Management believes consistent
success is dependent principally on tool quality and durability, on-time
delivery and price competitiveness. The Tooling Segment's design and engineering
services allowed it to compete for tool development work. The Tooling Segment
sold principally to customers in the United States.
All tooling orders were manufactured to customer specifications as
indicated on tool drawings. Tools were made from bar stock steel or carbide
blanks and generally were routed through a production sequence that included
cutting, turning (CNC/lathe work), heat treating, grinding, polishing and
coating.
Form Flow and L&H have separate plant facilities owned by the Company.
Design and engineering services are located at a Form Flow facility, and are
offered by all three subsidiaries comprising the Tooling Segment.
The Tooling Segment employed a total of about 135 full-time employees: 80%
direct and indirect labor (including factory floor supervision), 3% in
engineering, 2% in sales, 10% office and 5% management. The Tooling Segment
operates from the following facilities:
- Form Flow is located in two 12,600 square foot adjacent buildings on
approximately four acres of land (owned by the Company) at 6901 and 6999
Cogswell in Romulus, Michigan 48174.
- L&H and Micanol is located in a 17,400 square foot building on approximately
two acres of land (owned by the Company) at 38200 Ecorse Road, Romulus,
Michigan 48174.
Prior to its sale, the Metal Parts Forming Segment primarily manufactured
automotive and truck parts from steel bar, coil and tubing using cold forging
and forming machines and various types of secondary machining, such as
threadrolling and piercing equipment.
The financial condition and results of operations of the Tooling Segment
and Metal Parts Forming Segment are described in the Company's Form 10-K for the
period ended September 30, 1999 and the Company's Form 10-Q for the quarters
ended December 31, 1999 and March 31, 2000, all of which are incorporated herein
by reference and made a part hereof.
INTERESTS OF CERTAIN PERSONS IN THE LIQUIDATION
In the past, we have granted stock options to our officers and employees,
some of which are currently exercisable. Because the exercise price of these
options has been greater than the trading price of the Common Stock, these
options generally remained unexercised. If the liquidation is approved, it is
anticipated that the amount ultimately distributed with respect to each share of
Common Stock may be greater than the exercise price of some or all of the
exercisable stock options. In that event, it is likely that some or all of those
stock options would be exercised. Information regarding our stock options is set
forth in our Form 10-K for the fiscal year ended September 30, 1999, a copy of
which is incorporated herein by reference and made a part hereof.
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ACCOUNTING TREATMENT
Proforma financial statements for the quarter ended March 31, 2000 have
been presented to reflect the liquidation. The Company adopted liquidation basis
of accounting for financial statement purposes effective April 1, 2000. The
liquidation basis of accounting requires that assets and liabilities be valued
at their estimated liquidation value. Assets and liabilities which have not been
revalued to liquidation value are disclosed as such on the face of the financial
statements. In addition, under the liquidation basis of accounting, gains and
losses from dispositions of assets are displayed as net amounts versus gross
revenue and expenses under the going concern basis of accounting. The primary
financial statements required under the liquidation basis of accounting are a
Statement of Net Assets (Deficiency) and a Statement of Changes in Net Assets
(Deficiency).
REPORTING REQUIREMENTS
Whether or not the Plan of Liquidation is approved, we have an obligation
to continue to comply with the applicable reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), even though
compliance with such reporting requirements is economically burdensome. If the
Plan of Liquidation is approved and, in order to curtail expenses, we will,
after filing our Certificate of Dissolution, seek relief from the Securities &
Exchange Commission ("SEC") from the reporting requirements under the Exchange
Act. We anticipate that, if such relief is granted, we would continue to file
current reports on Form 8-K to disclose material events relating to our
liquidation and dissolution along with any other reports that the SEC might
require.
INCORPORATION BY REFERENCE
All information appearing in this Proxy Statement is qualified in its
entirety by the information and financial statements (including notes thereto
appearing in the documents which are incorporated by reference). You can obtain
copies of documents incorporated by reference to this Proxy Statement at the
SEC's website at www.sec.gov or you can contact us at (248) 305-9410. You are
encouraged to read the documents incorporated by reference in their entirety.
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SECOM GENERAL CORPORATION AND SUBSIDIARIES
UNAUDITED PROFORMA CONSOLIDATED CONDENSED STATEMENT OF NET
ASSETS IN LIQUIDATION AS OF MARCH 31, 2000 AND
UNAUDITED PROFORMA CONSOLIDATED STATEMENT OF CHANGES
IN NET ASSETS (LIQUIDATION BASIS) FOR THE PERIOD
SEPTEMBER 30, 1999 TO MARCH 31, 2000
The following Unaudited Proforma Consolidated Condensed Statement of Net
Assets in Liquidation as of March 31, 2000 and the Unaudited Proforma
Consolidated Condensed Statement of Changes in Net Assets for the Period
September 30, 1999 to March 31, 2000 assume that Secom has adopted the
liquidation basis of accounting as of March 31, 2000 and September 30, 1999,
respectively.
The valuation of assets and liabilities necessarily requires many estimates
and assumptions and there are substantial uncertainties in carrying out the
provisions of the plan of liquidation. The actual value of any liquidating
distributions will depend upon a variety of factors including, but not limited
to:
- the actual proceeds from the sale of the Novi real estate and collection of
outstanding accounts and notes receivable;
- the settlement amount of our liabilities and secured debt;
- federal and state tax liabilities; and
- actual costs incurred in connection with the carrying out of the plan of
liquidation, including administrative costs during the liquidation period.
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SECOM GENERAL CORPORATION AND SUBSIDIARIES
UNAUDITED PROFORMA CONSOLIDATED CONDENSED STATEMENT OF NET ASSETS
IN LIQUIDATION AS OF MARCH 31, 2000(1)
<TABLE>
<CAPTION>
HISTORICAL PROFORMA
CONSOLIDATED PROFORMA CONSOLIDATED
MARCH 31, 2000 ADJUSTMENTS MARCH 31, 2000
-------------- ----------- --------------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents......................... $ 2,447,800 $ 9,600,000(2) $10,683,800
(1,700,000)(3)
336,000(4)
Accounts receivable, net.......................... 2,408,300 2,408,300
Property, plant, equipment and inventory of
discontinued subsidiary......................... 4,906,200 (4,906,200)(2) --
Real estate and buildings held for sale........... 2,900,000 (974,100)(4) 2,488,900
563,000(5)
Other assets...................................... 353,500 (8,000)(4) 110,000
(235,500)(5)
Property, plant and equipment, net................ 102,700 102,700
Notes receivable.................................. 1,448,400 151,600(5) 1,600,000
----------- ----------- -----------
Total assets............................... $14,566,900 $ 2,826,800 $17,393,700
=========== =========== ===========
LIABILITIES:
Current maturities of long-term debt.............. $ 195,700 $ 195,700
Accounts payable.................................. 709,900 709,900
Accrued wages and benefits........................ 606,900 606,900
Accrued other..................................... 434,000 434,000
Debt secured by buildings and real estate held for
sale............................................ 2,447,700 (746,100)(4) 1,701,600
Debt secured by property, plant and equipment of
discontinued subsidiary......................... 54,400 (54,400)(2) --
----------- ----------- -----------
Total liabilities.......................... 4,448,600 (800,500) 3,648,100
Stockholders' equity
Common stock.................................... 103,800 103,800
Additional paid-in capital...................... 18,736,700 18,736,700
Accumulated deficit............................. (8,722,200) 4,748,200(2) (5,094,900)
(1,700,000)(3)
100,000(4)
479,100(5)
----------- ----------- -----------
Total stockholders' equity................. 10,118,300 3,627,300 13,745,600
----------- ----------- -----------
Total liabilities and stockholders'
equity.................................. $14,566,900 $ 2,826,800 $17,393,700
=========== =========== ===========
NET ASSETS IN LIQUIDATION......................... $13,745,600
===========
Number of Common shares outstanding............... 1,029,124 1,029,124
=========== ===========
NET BOOK VALUE PER COMMON SHARE................... $ 9.83
===========
NET ASSETS IN LIQUIDATION PER COMMON SHARE........ $ 13.36
===========
</TABLE>
20
<PAGE> 23
SECOM GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PROFORMA CONSOLIDATED CONDENSED STATEMENT OF
NET ASSETS IN LIQUIDATION AS OF MARCH 31, 2000
1. This statement gives effect to the various asset sales and adoption of the
Plan of Liquidation as if they had occurred as of March 31, 2000.
2. To record the sale of the Company's Tooling Segment's assets and gain on the
sale of those assets as if the operation had been had been discontinued and
disposed of as of March 31, 2000.
3. To record the estimated $1.6 million federal income tax and $100,000 Michigan
SBT tax liabilities on the sale of the Tooling Segment's assets. The
liabilities are shown as a reduction in cash.
4. To record the sale of the Company's building and real estate located at 26600
Heyn Drive, Novi, Michigan. The gain is recorded as an increase in cash, net
of an estimated $50,000 federal income tax liability.
5. To adjust assets to their estimated liquidation values. The proforma
presentation assumes the remaining Novi real estate will sell for a gross
price of $2.75 million.
21
<PAGE> 24
SECOM GENERAL CORPORATION AND SUBSIDIARIES
UNAUDITED PROFORMA CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
(LIQUIDATION BASIS) FOR THE PERIOD SEPTEMBER 30, 1999 TO MARCH 31, 2000
The following Proforma Statement of Changes in Net Assets includes the
following adjustments to give effect to the asset sales and Plan of Liquidation
as if they had occurred as of September 30, 1999.
<TABLE>
<S> <C>
Stockholders equity at September 30, 1999 (going concern,
historical cost basis).................................... $ 9,722,500
Proforma adjustments:
Net cash received from the sale of the Tooling Segment's
assets, in excess of the assets September 30, 1999
historical net cost, less estimated tax liabilities of
$1.7 million........................................... 3,309,400
Increase in net assets from revaluing assets to
liquidation basis from going concern historical cost
basis as of September 30, 1999......................... 539,100
Net cash received from sale of the Company's building and
real estate located at 26600 Heyn Drive, Novi,
Michigan, in excess of the assets September 30, 1999
historical net cost, less an estimated federal income
tax liability of $50,000............................... 130,000
Other..................................................... 44,600
-----------
Net Assets in Liquidation as of March 31, 2000.............. $13,745,600
===========
</TABLE>
22
<PAGE> 25
PROPOSAL 2
ELECTION OF DIRECTORS
Four Directors will be elected to the Board at the 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 DGCL, the election of our
Directors requires a plurality of the votes represented in person or by proxy at
the meeting.
The four 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.
If our proposal with respect to the Plan of Liquidation is approved, we
will cease conducting operations and do not intend to reestablish any operations
in the future. However, we believe it to be in the best interest of our
Stockholders to continue to conduct our business and govern our affairs through
the Board of Directors. The primary purpose of the Board of Directors will be to
oversee our orderly liquidation and dissolution through the implementation of
the Plan.
THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF ROBERT CLEMENTE, GREGORY
ADAMCZYK, ROCCO POLLIFRONE AND RICHARD THOMPSON 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 Clemente, 47...... Director of the Company since December 1993 and Chairman
since December 1994, Mr. Clemente also served as President
and Chief Executive Officer of the Company from December
1993 through May 1998. Mr. Clemente is an attorney and
certified public accountant and, since September 1999, Of
Counsel to the law firm of Hardy, Lewis and Page, PC,
Birmingham, Michigan, where he had also been Of Counsel from
December 1993 to December 1996. From January 1997 through
August 1999, Mr. Clemente was Of Counsel to the firm of
Munro & Munro, PC, Troy, Michigan. Mr. Clemente specializes
in corporate, commercial and tax law.
Gregory Adamczyk, 45..... 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, Michigan and specialize
in manufacturing and engineering consulting, primarily for
automotive factories.
Rocco Pollifrone, 43..... Director of the Company since December 1993. Since August
1999, Mr. Pollifrone is the Chief Executive Officer of
Trumark Engineering, Detroit, Michigan. Prior to that, Mr.
Pollifrone was President and Chief Executive Officer of
Forward Planning Corp. and had been employed there or with
affiliated companies for over 20 years in various management
positions.
Richard Thompson, 30..... Director of the Company since December 1993. Mr. Thompson
has been the President and owner of MST Steel Corp., based
in Warren, Michigan, since 1998 and was Vice President of
MST Steel Corp. since 1991. MST Steel Corp. is a steel
service center that warehouses, processes and sells
flat-rolled steel, primarily for the automotive industry.
</TABLE>
23
<PAGE> 26
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, 1999, the Board held four
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 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 Richard Thompson, Gregory Adamczyk and Rocco
Pollifrone.
The Compensation Committee, which held four 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 Rocco Pollifrone and Richard Thompson.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Rehmann Robson P.C. as our independent
public accountants for the fiscal year ending September 30, 2000. The Board of
Directors has directed that management submit the selection of independent
auditors for the fiscal year ending September 30, 2000 for ratification by the
stockholders at the Annual Meeting. As our independent public accountants,
Rehmann Robson, P.C. will review our reports filed with the Securities and
Exchange Commission and consult with us in connection with various accounting
and financial reporting matters. Representatives of Rehmann Robson P.C. are
expected to be present at the 2000 Annual Meeting of Stockholders, will have an
opportunity to make a statement if they so desire, and will expect to respond to
appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
APPOINTMENT FOR FISCAL 2000 OF REHMANN ROBSON, P.C. AS INDEPENDENT PUBLIC
ACCOUNTANTS.
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.
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY
---- --- --------------------------
<S> <C> <C>
Robert A.
Clemente.......... 47 Chairman of the Board since 1994 and Director since 1993
Martin J.
Eidemiller........ 43 Vice President since 1994, Member of the Operating Committee
since June 1998 and Director from June 1998 through August
2000.
Paul D. Clemente.... 37 Vice President since 1997 and Member of the Operating
Committee since June 1998.
Scott J.
Konieczny......... 35 Chief Financial Officer since October 1998, Secretary and
Treasurer since June 1998, and member of the Operating
Committee since April 1999.
</TABLE>
In June 1998, the Board of Directors formed an Operating Committee to
fulfill the duties of the Company's president. Members of the Operating
Committee are appointed by the Board of Directors and
24
<PAGE> 27
serve at the pleasure of the Board. Currently, Martin Eidemiller, Paul Clemente
and Scott Konieczny serve on the Operating Committee.
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 ANNUAL UNDERLYING ALL OTHER
POSITION COMPENSATION YEAR SALARY BONUS COMPENSATION BONUS OPTIONS (#)
--------------------- ---- ------ ----- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Clemente 1999 $150,000 -- -- -- --
Chairman of the Board 1998 150,000 -- -- -- --
1997 150,000 -- -- -- --
Martin J. Eidemiller 1999 $120,000 $18,000 -- -- --
Vice President and Member of
the 1998 117,500 25,000 15,000(1) -- --
Operating Committee 1997 110,000 20,000 -- -- --
Paul D. Clemente 1999 $100,000 $ 5,800 -- -- --
Vice President and Member of
the Operating Committee
Scott J. Konieczny 1999 $ 90,000 $12,800 -- -- --
Chief Financial Officer,
Secretary, Treasurer and
Member of the Operating
Committee
</TABLE>
---------------------
(1) Paid in consideration of Mr. Eidemiller executing a noncompetition agreement
with the Company.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUED
The following table provides information on option exercises in fiscal 1999
by the Named Executive Officers and the value of such officers' unexercised
options at September 30, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN THE
OPTIONS AT MONEY OPTIONS AT
SHARES FISCAL YEAR END (#) FISCAL YEAR END ($)
ACQUIRED ON VALUE ------------------------------ ------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Clemente -- -- 27,000 18,000 -- --
Martin J. Eidemiller -- -- 6,000 4,000 -- --
Paul D. Clemente -- -- 800 3,200 -- --
Scott J. Konieczny -- -- 800 1,200 -- --
</TABLE>
COMPENSATION PURSUANT TO STOCK OPTIONS
During fiscal 1999, no options were awarded to any of the Company's Named
Executive Officers. As of June 30, 2000, 35,000 options were outstanding to the
Company's Named Executive Officers outside of the 1991 Non-qualified Stock
Option Plan.
25
<PAGE> 28
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 80,000 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 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 June 30, 2000, stock options for 33,200 shares were outstanding to
employees, including certain officers, pursuant to the 1991 Plan. During fiscal
1999, 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 1999, the Company paid
$24,600 to Gregory Adamczyk, a Director of the Company, in consideration of
services he performed in completing certain special projects authorized in
fiscal 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 Richard Thompson were appointed to the Compensation
Committee in April 1999.
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,
26
<PAGE> 29
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.
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 1999 COMPENSATION CONCERNING CHIEF EXECUTIVE OFFICER
Since June 1998, the Company has operated under a Board appointed Operating
Committee, which fulfills the duties of the Company's president. Currently, the
Operating Committee is comprised of Paul Clemente, Martin Eidemiller and Scott
Konieczny. The Compensation Committee considers the performance of each
individual member of the Operating Committee as well as the performance of the
Company as a whole in determining the compensation of each member of the
Operating Committee. Since each member of the Operating Committee is also an
officer of the Company, the Board awarded each member nominal additional
compensation commensurate with the additional responsibilities of the Operating
Committee. In addition, during fiscal 1999, Robert Clemente performed several
special projects for the Company as well as the duties of Chairman of the Board.
In consideration of Mr. Robert Clemente performing the various special projects,
the Compensation Committee maintained his salary at $150,000 for fiscal 1999,
although no bonus or other compensation was awarded. Since many of the special
projects had been completed by November 1999, the Compensation Committee reduced
Mr. Clemente's salary to $75,000.
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
27
<PAGE> 30
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 "Certain Relationships and Related
Transactions" herein.
Presented by: The Compensation Committee of the Board of Directors
Rocco Pollifrone
Richard Thompson
28
<PAGE> 31
COMPANY PERFORMANCE
The following graph depicts a five (5) year comparison of cumulative total
returns, assuming $100 was invested on September 30, 1994 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
--------------------------------------------
9/94 9/95 9/96 9/97 9/98 9/99
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Secom General Corporation................................. 100 104 92 78 14 22
NASDAQ Stock Market (U.S.)................................ 100 138 164 225 229 372
NASDAQ Non-financial...................................... 100 139 163 218 220 372
</TABLE>
---------------------
* $100 invested on 9/30/94 in stock or index -- including reinvestment of
dividends. Fiscal year ending September 30.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Clemente does not receive any portion of the fees paid by the Company
to Munro & Munro. During 1999, 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 owner and officer is Director
Gregory Adamczyk.
29
<PAGE> 32
OTHER MATTERS
As of the date of this Proxy Statement, our Board knows of no other matters
which may properly be, or are likely to be, brought before the meeting. If any
other matters should properly come before the Meeting, or any adjournment
thereof, it is the intention of the persons named in the accompanying proxy to
vote on such matters as they, in their discretion, may deem advisable.
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 2001 ANNUAL MEETING
In the event that we have not completed our liquidation by such time, we
intend to mail next year's proxy statement to our stockholders on or about July
14, 2001. Any stockholder proposal intended to be presented at the Company's
2001 annual meeting of stockholders pursuant to Rule 14a-8 promulgated under the
Securities Exchange Act of 1934 (the "Exchange Act") must be received by the
Company at its executive offices.
Rule 14a-4(c)(1) of the Exchange Act governs our use of our discretionary
proxy voting authority with respect to a stockholder proposal which the
stockholder has not sought to include our proxy statement. This Rule provides
that if a proponent of a proposal fails to notify us in a reasonable time before
we mail our proxy materials for this year, then the management proxies will be
allowed to use their discretionary voting authority when the proposal is raised
at the meeting, without any discussion of the matter in the proxy statement.
ANNUAL REPORT AND FORM 10-K
All Stockholders of record on June 30, 2000 have been sent, or are
concurrently being sent, a copy of the Company's 1999 Annual Report to
Stockholders, which contains audited consolidated financial statements for the
fiscal years ended September 30, 1999, 1998 and 1997.
A copy of our Annual Report on Form 10-K for the fiscal year ended
September 30, 1999 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 1999 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,
/s/ Scott J. Konieczny
SCOTT J. KONIECZNY
Secretary
Novi, Michigan
July 24, 2000
30
<PAGE> 33
EXHIBIT A
PLAN OF LIQUIDATION AND DISSOLUTION OF
SECOM GENERAL CORPORATION
WHEREAS, the Board of Directors (the "Board") of Secom General Corporation
(the "Company"), a Delaware corporation, has deemed it advisable that the
Company should be liquidated and subsequently dissolved and has approved and
determined that this Plan of Liquidation and Dissolution of Secom General
Corporation (this "Plan") is advisable and in the best interests of the
stockholders of the Company; and
WHEREAS, the Board has directed that this Plan be submitted to the
stockholders of the Company for their approval or rejection at the annual
meeting of stockholders of the Company to be held in or about August 24, 2000 or
such other date as the Board may determine, in accordance with the requirements
of the Delaware General Corporation Law (the "DGCL") and the Company's
Certificate of Incorporation (the "Certificate of Incorporation") and has
authorized the filing with the Securities and Exchange Commission (the "SEC"),
and the distribution of a proxy statement to stockholders (the "Proxy
Statement"), in connection with the solicitation of proxies for such meeting;
and
WHEREAS, the Board, upon substantial completion of the liquidation of the
Company's properties and assets or such earlier time as determined in its
discretion, may voluntarily dissolve the Company in accordance with the DGCL and
the Internal Revenue Code of 1986, as amended (the "Code"), upon the terms and
conditions set forth in this Plan;
NOW, THEREFORE, the Board hereby adopts and sets forth this Plan of
Liquidation and Dissolution of Secom General Corporation as follows:
I. EFFECTIVE DATE OF PLAN.
The effective date of this Plan (the "Effective Date") shall be the date on
which the stockholders of the Company vote to approve this Plan.
II. CESSATION OF BUSINESS ACTIVITIES.
This Plan is intended to be a complete plan of liquidation and dissolution.
After the Effective Date, the Company shall not engage in any business
activities except for the purpose of preserving the value of its assets,
prosecuting and defending suits by or against the Company, adjusting and winding
up its business and affairs, selling and liquidating its properties and assets
and making distributions to stockholders in accordance with this Plan. The
directors in office on the Effective Date and, at the pleasure of such
directors, the officers of the Company, shall continue in office solely for
these purposes and as otherwise provided in this Plan.
III. LIQUIDATION OF ASSETS.
After the Effective Date, the Company shall sell, exchange, transfer,
lease, license, or otherwise dispose of all of its property and assets,
including the Company's intellectual property and other intangible assets, to
the extent, for such consideration (which may consist in whole or in part of
money or other property) and upon such terms and conditions as the Board deems
expedient and in the best interests of the Company and its stockholders, without
any further vote or action by the Company's stockholders. The Company's assets
and properties may be sold in bulk to one buyer or a small number of buyers or
on a piecemeal basis to numerous buyers. The Company will not be required to
obtain appraisals or other third party opinions as to the value of its
properties and assets in connection with the liquidation. As part of the
liquidation of its property and assets, the Company shall collect, or make
provision for the collection of, all accounts receivable, debts and claims owing
to the Company.
A-1
<PAGE> 34
IV. PAYMENT OF DEBTS.
Prior to making any distributions to the Company's stockholders, the
Company shall pay, or as determined by the Board, make reasonable provision to
pay, all claims and obligations of the Company, including all contingent,
conditional or unmatured claims known to the Company.
Following the Effective Date, the Board may, if and to the extent deemed
necessary or advisable by the Board, establish a contingency reserve (the
"Contingency Reserve") and set aside into the Contingency Reserve such amounts
of cash or property of the Company as the Board, in its discretion, determines
is sufficient to account for unknown events, claims, contingencies and expenses
incurred in connection with the collection and defense of the Company's property
and assets and the liquidation and dissolution provided for in this Plan.
Following the payment, satisfaction or other resolution of all such events,
claims, contingencies and expenses, any amounts remaining in the Contingency
Reserve shall be distributed in accordance with this Plan.
V. DISTRIBUTIONS TO COMMON STOCKHOLDERS.
Following the payment or the provision for the payment of the Company's
claims and obligations as provided in Section IV, the Company shall distribute
pro rata to the holders of the Common Stock all of its remaining property and
assets, if any, in one or a series of distributions. The final distribution
shall sometimes be referred to as the Dissolution Distribution.
VI. NOTICE OF LIQUIDATION.
As soon as practicable after the Effective Date, but in no event later than
twenty (20) days prior to the filing of the Certificate of Dissolution as
provided in Section VII below, the Board may direct the officers to mail notice
in accordance with the DGCL to all its creditors and employees that this Plan
has been approved by the Board and the Company's stockholders.
VII. CERTIFICATE OF DISSOLUTION.
At such time as the Board determines, in its discretion to be appropriate,
the officers of the Company shall execute and cause to be filed with the
Secretary of the State of Delaware (the "Secretary of State") and elsewhere as
may be required or deemed appropriate, such documents as may be required to
effectuate the dissolution of the Company, including a Certificate of
Dissolution conforming to the requirements of Section 275 of the DGCL (the
"Certificate of Dissolution"). From and after the date such documents are
accepted by the Secretary of State, the Company will be deemed to be completely
dissolved, but will continue to exist under Delaware law for the purposes of
paying, satisfying and discharging any existing debts or obligations, collecting
and distributing its assets, and doing all other acts required to liquidate and
wind up the Company's business affairs. The members of the Board in office at
the time the Certificate of Dissolution is accepted for filing by the Secretary
of State shall have all powers provided to them under the DGCL and other
applicable law.
VIII. POWERS OF BOARD AND OFFICERS.
The Board and the officers of the Company are authorized to approve such
changes to the terms of any of the actions referred to herein, to interpret any
of the provisions of this Plan, and to make, execute and deliver such other
agreements, conveyances, assignments, transfers, certificates and other
documents and take such other action as the Board and the officers of the
Company deem necessary or desirable in order to carry out the provisions of this
Plan and effect the complete liquidation and dissolution of the Company in
accordance with the Code and the DGCL and any rules and regulations of the SEC
or any state securities commission, including, without limitation, any
instruments of dissolution or other documents, and withdrawing any qualification
to conduct business in any state in which the Company is so qualified, as well
as the preparation and filing of any tax returns.
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<PAGE> 35
IX. CANCELLATION OF STOCK.
The distributions to the Company's stockholders pursuant to this Plan, if
any, shall be in complete redemption and cancellation of all of the outstanding
Common Stock. As a condition to any disbursement made under the Plan after the
filing of the Certificate of Dissolution, made the Board may require
stockholders to surrender their certificates evidencing the Common Stock to the
Company or its agent for cancellation. If a stockholder's certificate for shares
of Common Stock has been lost, stolen or destroyed, such stockholder may be
required, as a condition to the disbursement of any distribution under this
Plan, to furnish to the Company satisfactory evidence of the loss, theft or
destruction thereof, together with a surety bond or other security or indemnity
reasonably satisfactory to the Company.
X. RESTRICTIONS ON TRANSFER OF SHARES.
The Company shall close its stock transfer books and discontinue recording
transfers of Common Stock at the close of business on the record date fixed by
the Board for filing the Certificate of Dissolution (the "Dissolution Record
Date"), and thereafter, certificate representing the Common Stock shall not be
assignable or transferable on the books of the Company except by will, intestate
succession or operation of law. The proportionate interests of all of the
stockholders of the Company shall be fixed on the basis of their respective
stock holdings at the close of business on the Dissolution Record Date, and,
after the Dissolution Record Date, any distributions made by the Company shall
be made solely to the stockholders of record at the close of business on the
Dissolution Record Date, except as may be necessary to reflect subsequent
transfers recorded on the books of the Company as a result of any assignments by
will, intestate succession or operation of law.
XI. LIQUIDATING TRUST.
If advisable for any reason to complete the liquidation and distribution of
the Company's assets to its stockholders, the Board may at any time transfer to
a liquidating trust (the "Trust") the remaining assets of the Company. The Trust
thereupon shall succeed to all of the then remaining assets of the Company,
including all amounts in the Contingency Reserve, and any remaining liabilities
and obligations of the Company. However, if all of the Company's assets are not
distributed within three years after the date the Certificate of Dissolution is
filed, the Company will transfer all of its remaining assets to the Liquidating
Trust. The sole purpose of the Trust shall be to prosecute and defend suits by
or against the Company, to settle and close the business of the Company, to
dispose of and convey the assets of the Company, to satisfy the remaining
liabilities and obligations of the Company and to collect and distribute the
remaining assets of the Company to its stockholders. Any distributions made from
the Trust shall be made in accordance with the provisions of this Plan. The
Board may appoint one or more of its members to act as trustee or trustees of
the Trust and to cause the Company to enter into a liquidating trust agreement
with such trustee or trustees on such terms and conditions as the Board
determines. Approval of this Plan by the stockholders also will constitute the
approval by the stockholders of any appointment of the trustees and of the
liquidating trust agreement between the Company and such trustees.
XII. COMPENSATION.
The Company may pay to the Company's officers, directors, employees and
agents or trustees, or any of them, compensation for services rendered in
connection with the implementation of this Plan. Approval of this Plan by the
stockholders of the Company shall constitute the approval of the stockholders of
the payment of any such compensation referred to in this Section.
XIII. INDEMNIFICATION.
The Company shall continue to indemnify its officers, directors, employees,
agents and trustees in accordance with its Certificate of Incorporation, bylaws
and any contractual arrangements as therein or
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<PAGE> 36
elsewhere provided, and such indemnification shall apply to acts or omissions of
such persons in connection with the implementation of this Plan and the winding
up of the affairs of the Company. The Company's obligation to indemnify such
persons may be satisfied out of the Contingency Reserve or out of assets
transferred to the Trust, if any. The Board and the trustees of any Trust are
authorized to obtain and maintain insurance as may be necessary to cover the
Company's indemnification obligations.
XIV. COSTS.
The Company is authorized, empowered and directed to pay all legal,
accounting, printing and other fees, costs and expenses for services rendered to
the Company in connection with the preparation, adoption and implementation of
this Plan, including, without limitation, any such fees and expenses incurred in
connection with the preparation of a proxy statement for the meeting of
stockholders to be held for the purpose, among others, of voting upon the
approval of this Plan.
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<PAGE> 37
SECOM GENERAL CORPORATION
PROXY CARD FOR ANNUAL MEETING AUGUST 24, 2000
The undersigned hereby appoints Robert A. Clemente and Scott J. Konieczny or any
one of them acting in the absence of the other, 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 DoubleTree Hotel, located at 27000 Sheraton Drive, Novi, Michigan 48377,
at 10:00 a.m. local time on Thursday, August 24, 2000, 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. To approve and adopt the Company's Plan of Liquidation and Dissolution.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
2. Election of Directors [ ] FOR [ ] WITHHELD Nominees: Robert A. Clemente,
Gregory Adamczyk, Rocco Pollifrone and Richard Thompson.
For all of the above, except vote withheld for the following nominee(s):
------------------------------------------------------------------------------
3. To ratify and approve the selection of Rehmann Robson P.C. as independent
auditors for the fiscal year ending September 30, 2000.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
4. Such other business as may properly come before the meeting or any
adjournment thereof.
(See reverse side)
(Continued from other side)
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.
