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 14a6
(e)(2)
(x) Definitive Proxy Statement
() Definitive additional Materials
() Soliciting Material Pursuant to a240.14a-11(c)or a240.14a-12
(Name of Registrant as Specified In Its charter): REALCO, INC.
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (check the appropriate Box):
(x) No fee required.
() Fee computed on table below per Exchange Act Rules 14a-6(I)(4) and 0-11.
1) Title of each class of securities to which transaction applies: No Par
Value Common Stock and Classes A and B Preferred Stock
2) Aggregate number of securities to which transaction applies: 3,099,347
shares
3) Per unit price of other underlying value of transaction computed pursuant
to forth the amount on which the filing fee is calculated and state how
it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee Paid:
() Fee paid previously with preliminary meaterials.
() 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 Previosly Paid:
..............
2) Form, Schedule or Registrantion statement No.
..............
3) Filing Party:
..............
4) Date Filied:
..............
(Fover Page to Schedule 14A amended in Release No. 34-37692 (par.85,845),
effective October 7, 1996, 61 F.R. 49957.)
PROXY STATEMENT
AND
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on March 5, 1998
The Annual Meeting of Shareholders of REALCO, INC. ( the
"Company") will be held on March 5, 1998, in the Surrey Room of
the Warwich Hotel, 65 West 54th Street at the Avenue of the
Americas, New York New York 10019, at 9:00 a.m., New York time,
to act upon the following:
(1) To elect seven Directors, and
(2) To consider such other business as may properly come
before the Annual Meeting.
Details relating to the above matters are set forth in the
attached Proxy Statement. The Board of Directors is not aware of
any other matters to come before the Annual Meeting. Only
shareholders of record at the close of business on January 15,
1998, are entitled to vote at the Annual Meeting. Shares cannot
be voted unless a signed proxy is provided or other arrangements
are made to have the shares represented at the Meeting.
IMPORTANT: WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, WE
URGE YOU TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY WITHOUT
DELAY. REALCO, INC. HAS FURNISHED FOR YOUR CONVENIENCE A
PRE-ADDRESSED, STAMPED ENVELOPE. PLEASE MAIL IN YOUR PROXY
TODAY. YOUR PROMPT RETURN OF THE ENCLOSED PROXY WILL SAVE REALCO
THE NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO OBTAIN A
QUORUM AT THE ANNUAL MEETING.
Sincerely,
s/Melvin A. Hardison
________________________
MELVIN A. HARDISON, Secretary
Albuquerque, New Mexico, January 19, 1998.
PROXY STATEMENT
REALCO, INC.
1650 University Boulevard, N.E., Suite 5-100
Albuquerque, New Mexico 87102
PERSONS MAKING THE SOLICITATION
The Board of Directors (the "Board") of REALCO, INC. (the
"Company") solicits the enclosed proxy for use at the Annual
Meeting of Shareholders of the Company, to be held in the Surrey
Room of the Warwick Hotel, 65 West 54th Street at the Avenue of
the Americas, New York, New York 10019, at 9:00 a.m., New York
time and at any postponement(s) or adjournment(s) of the Annual
Meeting.
METHOD OF SOLICITATION
Solicitation will be made primarily by mail, commencing on or
about January 15, 1998, but may also be made by telephone or oral
communications by directors, officers and employees of the
Company.
PROXIES AND VOTING AT THE MEETING
A majority of the outstanding shares of the Company's No Par
Value Stock and Voting Preferred Stock, counted in the aggregate,
must be represented in person, or by proxy at the Annual Meeting
in order to hold the Annual Meeting. Only shareholders of record
at the close of business on January 15, 1998, are entitled to
vote at the Annual Meeting. Shareholders are encouraged to sign
and return their proxies promptly, indicating the manner in which
they wish their shares to be voted. The proxy agents will vote
the shares represented by the proxies according to the
instructions of the persons giving the proxies. Unless other
instructions are given, votes will be cast in the proxy's
discretion:
1. For the election of the seven nominees for Director
presented later in this Proxy Statement.
To be elected as a director, a nominee must receive the
votes of a majority of the shares represented at the Meeting
(counting No Par Value Stock and Voting Preferred Stock in
the aggregate). If no candidate receives a majority, the
incumbent Director in that seat will remain on the Board.
If, for any reason any of the nominees become unavailable
for election, which the Board does not anticipate, the
proxies will be voted for a substitute nominee to be
designated by the Board.
2. In the Proxy's discretion on the transaction of such other
business as may properly come before the Annual Meeting or
any postponement(s) or adjournment(s) of the Annual Meeting.
To be passed, any other item that comes before the
shareholders must also receive the affirmative vote of a
majority of the votes cast in person and by proxy at the
meeting.
Election inspectors will be appointed at the meeting. Such
Inspectors will determine the validity of proxies and will
receive, canvas and report to the meeting the votes cast by the
shareholders on each item brought before the shareholders for
vote. No shares of the Company's Common Stock or Voting Preferred
Stock can be voted by any person who is not the record owner or
voting under authority granted by the record owner. All returned
proxies are counted toward the required quorum or the required
percentages of shares present at the meeting for election of
directors . If any shareholder returns a proxy without indicating
his directions whether the proxy should be voted for or against
any item or voted for or withheld from voting on any item, the
proxy will be voted by the proxy agents for management's nominees
for director and in the agent's discretion on any other matter
coming before the meeting.
Any Shareholder returning a proxy has the power to revoke that
proxy at any time before it is voted, by delivery of a written
notice of revocation, signed by the shareholder, to the Secretary
of the Company; by delivery of a signed proxy bearing a later
date; or by attending the Annual Meeting and voting in person.
Any proxy which is not revoked will be voted at the Meeting.
In accordance with Company bylaws, the Annual Meeting will be
conducted in accordance with an agenda which will be
conspicuously posted at the Annual Meeting. Participation at the
Meeting will be encouraged but will be limited to shareholders
and holders of valid proxies for shareholders. The Meeting will
start promptly at 9:00 a.m, New York time
ELECTION OF DIRECTORS
At the Annual Meeting, the shareholders will elect seven
Directors to each serve until the next annual or special meeting
of shareholders at which directors are elected. The Board of
Directors of the Company has nominated James A. Arias, Bill E.
Hooten, Arthur W. Schwartz, Marshall Blumenfeld, Jeffrey S.
Silverman, Martin S. Orland and Noel Zeller as Management's
candidates for the seven seats. Each of these individuals is a
current Director. Each of the Company's nominees has consented to
be nominated and to serve if elected. Certain Directors are
identified below as members of the Company's Audit Committee.
To be elected, each nominee must receive a majority of the votes
cast, in person or by proxy, at the Annual Meeting of
Shareholders.
MANAGEMENT'S NOMINEES FOR DIRECTOR
JAMES A. ARIAS, who has served as the Company's President, Chief
Executive Officer and a Director since its formation in September
1983. From 1975 to September of 1983, he was a partner of James
Bentley & Associates, a financial consulting and real estate
syndication firm in Albuquerque, New Mexico, which was merged
into and became a division of Financial Services Group, Inc., a
New Mexico corporation, of which Mr. Arias is President and a
controlling shareholder. Since 1984, he has served as Manager of
S&H Brokerage Inc., N.M., an insurance broker in Albuquerque, New
Mexico, which during the fiscal year became a 49.99% Company
subsidiary. From 1987 to July 1993, he served as President and a
Director of Valiant International, Inc., an aircraft acquisition
and servicing company. Since June 1995, he has served as interim
sole Director of Arinco Computer Systems Inc., a publicly traded
New Mexico corporation that currently has no active operations.
In August, 1997, at the time when the Company acquired a
shareholding interest in Miller and Schroeder Financial, Inc., a
broker dealer headquartered in Minneapolis, Minnesota Mr. Arias
became a Director of that Company. Mr. Arias is also a Director
of Quatro, Inc., a New Mexico electronics company. Both Miller
and Schroeder and Quatro, Inc. are privately held corporations.
Mr. Arias will devote substantially all of his time to the
affairs of the Company.
BILL E. HOOTEN, who served as an Executive Vice President and a
Director of the Company since March 31, 1995. From inception to
August 1995, Mr. Hooten served as the President and a Director of
the Company's predecessor Old Realco. He currently serves as a
Director and Chairman of the Finance and Real Estate Committees
of Presbyterian Health Care Services, headquartered in
Albuquerque.
ARTHUR A. SCHWARTZ, who has served as a Director of the Company
since November, 1994. For more than the past five years Mr.
Schwartz has been, and currently is, an owner/manager of S&H
Insurance Brokerage, Inc., of N.Y., an insurance broker located
in New York, New York. S&H Insurance Brokerage, Inc., of N.Y.,
is a 50.01% owner of S&H Insurance Brokerage, Inc. N.M., an
insurance brokerage company located in Albuquerque, New Mexico.
MARSHALL BLUMENFELD, who has served as a Director of the Company
since its formation in September 1983. Since 1963, Mr. Blumenfeld
has been engaged in the private practice of law in New York, New
York, until 1997 when he retired from the practice.
JEFFREY S. SILVERMAN, has served as a Director of the Company
since October 5, 1995. In 1997 Mr. Silverman became an owner and
the Chairman of LTS Capital Partners, LLC, a private investment
corporation. Mr. Silverman served as the Chief Executive Officer
and a Director of Ply Gem Industries, Inc., a company listed on
the New York Stock Exchange, from 1984 until 1997. From April
1990 to April 1994, Mr. Silverman was a member of the Board of
Governors of the American Stock Exchange.
MARTIN S. ORLAND, was first elected to the board by the
shareholders on March 21, 1997. He served for more than the past
5 years as President of Fortis Private Capital, Inc., a Delaware
corporation that conducted a private venture capital investment
business in New York, New York. During the same period, Mr.
Orland was the Executive Vice President of Fortis Advisors, Inc.,
A Delaware corporation, that conducted investments in commercial
real estate and mortgages in New York, New York. Both of these
corporations are subsidiaries of Fortis, Inc., which is a
subsidiary of a Dutch holding company. From April, 1993, through
August 1996, Mr. Orland was a director of Financing for Science
International, Inc., a publicly traded corporation, and since
November of 1996 has served a director of Continental Bank, a
publicly traded financial institution. In 1997, Mr. Orland became
a director of Quatro, Inc., a New Mexico based electronics
company.
NOEL ZELLER, was first elected to the board by the shareholders
on March 21, 1997. Mr. Zeller is the founder and owner of Zelco
Industries, Inc., a New York consumer products manufacturing
corporation, and for more than the past five years has served as
the President of that corporation. He is also the owner-manager
of Zeller Properties LLC, a New York corporation which is a real
estate investing company.
These nominees are the Company's current board of directors and
each has agreed to continue to serve as a Company Director if
reelected by the Shareholders.
All directors hold office until the next annual meeting of
shareholders or until their successors have been duly elected and
qualified. Executive officers of the Company are appointed by,
and serve at the discretion of, the Board of Directors. Directors
are not currently paid fees for attending directors' meetings,
but the Company reimburses directors for out-of-pocket expenses
incurred in attending board meetings.
The Executive Officers and the Directors of the Company are:
Name Age Position
James A. Arias (2) 59 President,CEO and Director
Bill E. Hooten 61 Executive Vice President and Director
Melvin A. Hardison 68 Secretary/Treasurer
Arthur A. Schwartz 57 Director
Marshall Blumenfeld(1) 63 Director
Jeffrey S. Silverman (2) 52 Director
Martin S. Orland(1)(2) 61 Director
Noel Zeller(1) 61 Director
___________________________________________________________________________
(1)Stock Option Committee member.
(2)Audit Committee member.
Background information for executive officers who are not also
Directors is as follows:
MELVIN A. HARDISON has served as the Secretary and Treasurer of
the Company since March 31, 1995. For more than the last five
years, Mr. Hardison served as the Vice President and Treasurer of
Old Realco.
Employment Agreements
In March 1995, at the time of the Company's reorganization, Mr.
Hooten and the Company entered into a five-year employment
agreement pursuant to which Mr. Hooten serves as the Company's
Executive Vice President. The Company pays Mr. Hooten an annual
salary of $120,000 per year.
On March 14, 1995, the Company entered into a three-year
employment agreement with Mr. Melvin A. Hardison, the Company's
Treasurer and Secretary, that provides he will be paid an annual
salary of $68,250.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information regarding
beneficial ownership of the Company's Common Stock and Preferred
Stock ("Voting Shares") as of January 19, 1998. The Preferred
Stockholders have voting rights identical to the Common
Stockholders. The Preferred Stockholders have the right to
convert all or any portion of their Preferred Stock to Common
Stock. The following table assumes the conversion of all
outstanding shares of Preferred Stock into Common Stock, and sets
forth the identity of (i)each shareholder who is known by the
Company to own beneficially more than 5% of the outstanding
Voting Shares, (ii) each director, and (iii) all officers and
directors as a group. Except as otherwise indicated, each of the
shareholders listed in the table or included within a group
listed in the table possesses sole voting and investment power
with respect to the Voting Shares indicated.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Shares Percent of
Name and Address Beneficially Owned Outstanding
Voting Shares
Financial Services Group, Inc.(1) 650,000 20.97%
1650 University Blvd., NE, Suite 5-100
Albuquerque, NM 87102
James A. Arias(1) 650,000 20.97%
1650 University Blvd., NE, Suite 5-100
Albuquerque, NM 87102
Nortek, Inc.(2) 200,000 6.45%
50 Kennedy Plaza
Providence, RI 02903
Arthur A. Schwartz (7) 35,000 1.13%
401 East 80th Street
New York, NY 10021
Marshall Blumenfeld (7) 27,500 *
2450 Northeast 135th Street, Apt. 803
North Miami, FL 33181
Bill E. Hooten(3)(4)(5) 270,714 8.74%
2033 Wyoming, NE
Albuquerque, NM 87112
MLPF&S CUST EPO(3)(4) 57,855 1.87%
Bill E. Hooten IRRA FBO
Bill E. Hooten
Bill E. Hooten and
Phyllis S. Hooten(3)(5) 212,859 6.87%
Revocable Trust UTA
2033 Wyoming, NE
Albuquerque, NM 87112
Jeffrey S. Silverman(7) 15,000 *
777 Third Ave.
New York, New York 10017
Martin S. Orland(7) 1,650 *
52 Centerville Rd.
Holmdel, New Jersey 07733
Noel Zeller(7) 35,000 1.13%
3 Justin Road
Harrison, New York 10528
Deleware Charter Guarantee 24,714 *
Trust Co. TTEEBFO (3)(6)
Melvin A. Hardison ISERP
P.O. Box 8963
Wilmington, Deleware 19899
All Executive Officers
and Directors as a Group(5)(7) 1,059,578 34.19%
___________
* less than 1%
1. Financial Services, Inc. is the registered holder of the
shares. Mr. James A. Arias, the President, Chief Executive
Officer and Chairman of the Board of the Company, is the sole
Director and President of Financial Services Group, Inc. and is
the beneficial holder of such shares.
2. Mr. Jeffrey S. Silverman, a director of the Company, was
the Chairman of the Board of Directors and Chief Executive
Officer of Ply Gem Industries, Inc., which was sold to Nortek,
Inc. during the year. As a result of the purchase, shares
formerly owned by Ply Gem, Inc. became owned by Nortek, Inc. Mr.
Silverman has no association with Nortek, Inc. in any capacity.
3. The Series "A" and Series "B" shares have one vote on all
matters that may come before a meeting of shareholders. Upon
the Offerings being declared effective by the SEC, the holders
of the Series "A" and "B" Preferred Shares have the right to
convert at any time their Preferred Shares to Common Stock.
4. The trust was established for the benefit of Bill E. Hooten
and was established as a Roll Over account,to accept the Series
A preferred Shares previously held in the Realco, Inc. Stock
Bonus Trust, Bill E. Hooten, Trustee, for the benefit of Bill E.
Hooten. Mr. Hooten as Trustee, has voting and investment power
over such shares.
5. Mr. Hooten, an officer and director of the Company, has the
right to convert Series A and B Shares into up to 390,102
shares of Company's Common Stock over which he has the right to
exercise voting and investment power.
6. The trust is an HR-10 Plan for the benefit of Melvin A.
Hardison and accepted as a "Roll Over" account. The Series A
preferred shares were previously held in the Realco, Inc. Stock
Bonus Trust for the benefit of Mr. Hardison. Prior to the
distribution from the Stock Bonus Trust, all voting rights were
held by Mr. Bill E. Hooten as Trustee.
7. Does not include options to purchase 10,000 shares of the
Company's common stock as described below in the discussion of
Management's compensation.
Family relationships
None of the Directors, nominees or Officers of the Company are
related (as first cousins or closer) by blood, marriage or
adoption to any other Director, Nominee, or Officer.
Meetings of the Board
The Board does not hold regular meetings, but does hold such
meetings as the business of the Company requires. During the
past year the Board held seven meetings. All members attended
at least 90% of the meetings.
The Board has no nominating or compensation committees, but does
have an Audit Committee consisting of Martin S. Orland, Jeffrey
S. Silverman and James A. Arias and a Stock Option Committee
consisting of Marshall Blumenfeld, Martin Orland and Noel Zeller.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation earned or awarded to the Company's officers during
the Company's last three completed fiscal years ended September
30, 1995, 1996 and 1997. No other executive officer of the
Company received total salary and bonus compensation in excess of
$100,000 for 1997.
Summary of Compensation Table
Annual Compensation
Name and Principal Position Year Salary Other Compensation
James A. Arias, 1995 -0- $ 60,903
President, CEO, Chairman 1996 $ 78,000 -0-
of the Board(1) 1997 $ 82,800 $ 14,300
Bill E. Hooten, Executive 1995(4) $ 115,720 $ 2,000
Vice President(2)(3) 1996 $ 120,000 -0-
1997 $ 120,000 -0-
Melvin A. Hardison 1995 $ 69,589 $ 3,733
Secretary and Treasurer 1996 $ 68,250 $ 1,733
1997 $ 68,250 $ 1,733
Vincent DiGregory(5) 1995 -0- -0-
President of Amity, Inc. 1996 -0- -0-
1997 $ 120,000 $ 10,491
Bradley Smith(6) 1995 -0- -0-
1996 -0- -0-
1997 $ 72,000 -0-
____________
(1) Since 1983 the Company has had an agreement to pay Financial
Services Group, Inc., (Financial Services) an affiliate, for
investment services provided by Mr. Arias as an employee of
Financial Services. Effective October 1, 1995, the Company paid
directly to Mr. Arias a management fee of $6,500 per month. This
fee arrangement calls for the fee to be increased at the rate of
6% per annum as a cost of living adjustment. During fiscal 1996
the fee paid was $6,500 per month and during fiscal 1997 the fee
paid was $6,900 per month. In addition, Mr. Arias is to be paid
an allowable bonus equal to 10% of all pretax profits in excess
of $400,000 during any year.
(2) All items of compensation paid to Mr. Hooten prior to March
1995, were paid by the Company's predecessor. Pursuant to Mr.
Hooten's employment agreement, he receives an annual salary of
$120,000 per year. See "Employment Agreements."
(3) Phyllis S. Hooten, the wife of Bill E. Hooten, is employed
by the company as an interior designer. She has been paid $9,000
per year during the fiscal years ended 1995, 1996 and 1997. She
was also furnished a car that is leased by the Company for $472
per month. None of this compensation paid or furnished to Mrs.
Hooten is included in the totals of the compensation paid to Mr.
Hooten.
(4) Compensation for fiscal year ended 1995 includes amounts
paid to Mr. Hooten by the predecessor company prior to its
acquisition by the Company.
(5) Mr. DiGregory was first employed by Amity, Inc., a Company
subsidiary, on July 1, 1996. His base salary is $120,000 and he
has an incentive bonus arrangement with Amity, Inc. which
resulted in an additional compensation of $10,491.
(6) Mr. Smith was first employed by the Company on January 1,
1997.
Option Grants
During 1997 the Company granted certain of its officers and
directors options under its Key Employee Incentive Stock Option
Plan as follows:
<TABLE>
Option/SAR Grants in Last Fiscal Year
__________________________________________________________________________________________
Potential realizable
value at assumed Alternative
annual rates of stock to (f) and
price appreciation for (g): grant
Individual grants option term date value
__________________________________________________ _____________ ___________________
(a) (b) (c) (d) (e) (f)(g) (h)
Number of Percent of total
securities options/SARs
underlying granted to Exercise Expiration * * Grant date
option/SARS employees price date value*
<S> <C> <C> <S> <C> <C> <C> <C>
Melvin A. Hardison 5,000 shares .1429 $3.30 3/20/02 $2,300
Arthur A. Schwartz 5,000 shares .1429 $3.30 3/20/02 $2,300
Marshall Blumenfeld 5,000 shares .1429 $3.30 3/20/02 $2,300
Jeffrey S. Silverman 5,000 shares .1429 $3.30 3/20/02 $2,300
Noel Zeller 5,000 shares .1429 $3.30 3/20/02 $2,300
Martin S. Orland 5,000 shares .1429 $3.30 3/20/02 $2,300
</TABLE>
________________________________________________________________
* Grant date present value computed under the Black-Scholes
option-pricing model. Option exercise prices set at 120% of
market price on date of grant.
On December 12, 1997, the Company granted selected employees
options to purchase an aggregate of 80,000 shares under the Plan
that are exerciseable until December 11, 2002 at a price of
$3.45 per share.
Employment Agreements
In March 1995, at the time of the Company's reorganization, Mr.
Hooten and the Company entered into a five-year employment
agreement pursuant to which Mr. Hooten serves as the Company's
Executive Vice President. The Company pays Mr. Hooten an annual
salary of $120,000 per year.
On March 14, 1995, the Company entered into a three-year
employment agreement with Mr. Melvin A. Hardison, the Company's
Treasurer and Secretary, that provides he will be paid an annual
salary of $68,250.
Certain Transactions
During the past two years the Company was a party to the
following transactions in which certain officers and/or directors
had a material interest:
In September, 1992, the predecessor company loaned Mr. Hooten,
the Company's Executive Vice President and a Director, $160,000.
The debt was unsecured and was to be repaid with interest at the
rate of 6% per annum, upon maturity. On June 30, 1995, the
Company's Board of Directors approved Mr. Hooten's offer to
reconvey 6,000 shares of Series "B" Preferred Stock to the
Company in exchange for a reduction of $60,000 of his personal
debt to the Company. At the time of this reduction, Mr. Hooten
executed a new note to the Company for $100,000, which interest
was payable annually and principal is payable in $50,000
installments on June 30, 1996 and 1997, and bears interest at the
annual rate of 6%. On June 30, 1996, the Company's Board of
Directors approved Mr. Hooten's offer to reconvey 5,000 shares of
Series "B" Preferred Stock to the Company in exchange for a
reduction of $50,000 of his personal debt to the Company. On June
30, 1997, the Company accepted an additional 5,000 shares of
Series "B" Preferred Stock in satisfaction of the $50,000 balance
of the loan.
On January 1, 1996, upon first acquiring an independent
determination of the fairness or reasonableness, a lease was
entered into with Mr. Hooten, an officer and director, to lease
space for the operation of Hooten/Stahl. The lease expired on
December 31, 1996, and is now continuing on a month-to-month
basis with no change in terms or conditions. The Company
currently pays an annual rental fee of $103,250. The rent
charged is comparable to rents charged in Albuquerque by others
for similar space.
On March 21, 1997, the Company granted to each of its non-officer
directors and to Mr. Hardison, the Company's Secretary and
Treasurer, an option under the Company Key Employee Incentive
Stock Option Plan expiring five years from the date of the grant
to purchase 5,000 shares of the Company's common stock at an
exercise price of $3.30 per share. The grant was made at 120%
over the market price of the Company's common stock on the date
of the grant as reported by NASDAQ. None of the options may be
exercised for one year from the date of the grant.
On December 12, 1997, the Company granted to each of its non-
officer directors and to Mr. Hardison, the Company's Secretary
and Treasurer, an option under the Company Key Employee
Incentive Stock Option Plan expiring five years from the date of
the grant to purchase 5,000 shares of the Company's common stock
at an exercise price of $3.45 per share. The grant was made at
120% over the market price of the Company's common stock on the
date of the grant as reported by NASDAQ. None of the options may
be exercised for one year from the date of the grant.
Any future transactions with officers, directors or 5% beneficial
shareholders of the Company's Common Stock will be on terms no
less favorable to the Company or its affiliates than could be
obtained from unaffiliated third parties and will be approved by
a majority of the independent outside members of the Company's
Board of Directors who do not have an interest in the
transaction.
Compensation of Directors:
Directors are not currently paid a fee or other compensation for
serving as Directors. However, the Company reimburses each
Director for all out of pocket expenses incurred to attend
Directors .
NO ADDITIONAL COMPENSATION ARRANGEMENTS
The Company has no retirement, pension, profit sharing or similar
program for the benefit of its officers, directors or employees
other than its Key Employee Stock Incentive Plan discussed
above. There are currently plans to the establish a 401k plan for
the benefit of the Company's employees.
DIVIDEND POLICY
The Company has not paid a dividend on its Common Stock for the
last five years. It is the present policy of the Company not to
pay cash dividends on the Common Stock. Any payment of cash
dividends in the future on the Common Stock will be dependent
upon the Company's financial condition, results of operations,
current and anticipated cash requirements, plans for expansion,
restrictions under debt obligations, if any, as well as other
factors that the Board of Directors deems relevant
LEGAL PROCEEDINGS
The Company is subject to certain legal claims from time to time
and is involved in litigation that has arisen in the ordinary
course of its business. It is the Company's opinion that it
either has adequate legal defenses to such claims or that any
liability that might be incurred due to such claims will not, in
the aggregate, exceed the limits of the Company's insurance
policies or otherwise result in any material adverse effect on
the Company's operations or financial position.
On April 11, 1997, the City of Albuquerque instituted
condemnation proceedings related to a parcel of land upon which
the registrant has a joint venture financing arrangement for
development. This matter is more fully described in the
Registrants 10-QSB filing of June 30, 1997. There has been
continuing correspondence, verbally and written between the legal
counsel for both parties in an effort to settle the matter,
however, no settlement has been achieved and litigation may be
necessary to determine the value of the property.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Grant Thornton LLP, certified public accountants, has provided
services to the Company during the past fiscal year, which
included the examination of the Company's annual report to
shareholders and annual report on Form 10-KSB. A representative
of Grant Thornton LLP will be present at the Annual Meeting, will
be available to respond to appropriate questions concerning the
financial statements of the Company, and will have the
opportunity to make a statement if the representative desires to
do so.
PROXY MATERIALS FOR NEXT ANNUAL MEETING
Shareholder proposals for consideration at the next Annual
Meeting, which the Company expects to hold in March, 1999, must
be received by the Company no later than August 30, 1998. In
order for such proposals to be included, they must be legal and
must comply with the Rules and Regulations of the Securities and
Exchange Commission.
OTHER BUSINESS
The Board knows of no other business which is to be presented at
the Annual Meeting. However, if other matters should properly
come before the Annual Meeting, the persons named in the proxy
will vote on those matters according to their judgment.
By Order of the Board of Directors
S/Melvin A. Hardison
__________________________________
Melvin A. Hardison, Secretary
Albuquerque New Mexico, January 19, 1998.
ON WRITTEN REQUEST, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A
COPY OF ITS ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 1997, FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION (INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES
THERETO) TO ANY RECORD HOLDER OR BENEFICIAL OWNER OF THE
COMPANY'S SHARES AS OF THE CLOSE OF BUSINESS ON JANUARY 15, 1998.
ANY EXHIBIT TO THE ANNUAL REPORT ON FORM 10-KSB WILL BE PROVIDED
ON REQUEST UPON PAYMENT OF THE REASONABLE EXPENSES OF FURNISHING
THE EXHIBITS. ANY SUCH WRITTEN REQUEST SHOULD BE ADDRESSED TO
MELVIN A. HARDISON, SECRETARY, REALCO, INC., 1650 UNIVERSITY
BOULEVARD, N.E., SUITE 5-100, ALBUQUERQUE, NEW MEXICO 87102.
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF REALCO, INC. to be held
at 9.00 am, March 5, 1998 in the Surrey Room of the Warwick Hotel,
65 West 54th Street at Avenue of the Americas, New York, New York.
This Proxy is solicited by Management. Management recommends that
you vote "yes" for the election of each Management Candidate.
THE UNDERSIGNED HEREBY APPOINTS AS PROXIES, James A. Arias and
Bill E. Hooten, and each of them, each with the power to appoint
his or her substitute, and hereby authorize them to represent and
to vote, as disignated below, all of the stock of REALCO, INC.
owned of record by the undersigned on January 15, 1998 at the 1998
Annual Meeting of Shareholders to be held on March 5, 1998, and at
any postponement(s) thereof, for the election of seven Directors
and to vote upon any other matters which may properly come before
the Meeting, subject to any directions in this proxy.
THIS PROXY REVOKES ALL PROXIES PREVIOUSLY GRANTED BY ME FOR ANY
PURPOSE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HERIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE SEVEN
PEOPLE WHO ARE MANAGEMENT'S NOMINEES TO THE BOARD OF DIRECTORS,
AND IN THE DISCRETION OF THE PERSONS NAMED AS PROXIES HEREIN ON ANY
OTHER MATTER BROUGHT BEFORE THE MEETING.
1. ELECTION OF DIRECTORS:
VOTE MY STOCK FOR THE FOLLOWING SEVEN NOMINEES:
( ) JAMES A. ARIAS, BILL E. HOOTEN, ARTHUR A. SCHWARTZ, MARSHALL
BLUMENFELD, JEFFREY S. SILVERMAN, NOEL ZELLER AND MARTIN
S. ORLAND.
( ) NO: WITHOLD AUTHORITY TO VOTE FOR ALL CANDIDATES LISTED ABOVE.
INSTRUCTIONS: IF YOU DO NOT WANT YOUR STOCK VOTED FOR ANY INDIVIDUAL
LISTED ABOVE, LINE THROUGH THAT NOMINEES NAME.
2. OTHER MATTERS THAT MAY COME BEFORE THE MEETING:
IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE MEETING (OR
ANY ADJORNMENTS OF THE MEETINGS) IN THEIR DESCRETION, THE PERSONS
NAMED AS PROXIES OR THEIR SUBSTITUTES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS IN THEIR DISCRETION.
( )GRANTED ( )WITHHELD
SIGN BELOW AS YOUR NAME APPEARS ON THE LABEL. IF THERE IS NO LABEL,
SIGN YOU NAME AS YOU NORMALLY SIGN YOUR NAME AND DATE YOUR PROXY.
________________________________________
SIGNATURE
DATE______________________,1998
________________________________________
SIGNATURE OF CO-OWNER (IF APPLICABLE)
DATE________________,1998
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE SIGN TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN
IN THE PARTNERSHIP NAME BY AUTHORIZED PERSON. IF ANYONE OTHER THAN
THE SHAREHOLDER(S) NAMED ON THE ABOVE LABEL IS SIGNING THIS PROXY,
INDICATE THE CAPACITY IN WHICH YOU ARE SIGNING.
PLEASE MARK, SIGN DATE AND RETURN THE PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE. YOUR STOCK CANNOT BE VOTED UNLESS YOU VOTE IN
PERSON AT THE ANNUAL MEETING OR YOU RETURN SIGNED AND DATED PROXY
BY THE TIME OF VOTING AT THE ANNUAL MEETING.
REALCO, INC.
1650 UNIVERSITY BOULEVARD, N.E., SUITE 5-100
ALBUQUERQUE, NEW MEXICO 87102
