UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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:
[x] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c)or Rule 14a-12
REALCO, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(4) Date Filed:
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<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 10, 2000
TO THE SHAREHOLDERS OF REALCO, INC.:
The Annual Meeting of Shareholders of REALCO, INC. (the "Company") will be held
on March 10, 2000, in Suite 490, at 1650 University Blvd., Albuquerque, New
Mexico, at 9:30 a.m., New Mexico time to act upon the following:
(1) To elect six directors to constitute the Board of Directors, each to
serve until the next annual meeting of shareholders or until their
successors have been duly elected and shall have qualified;
(2) To consider and vote upon increasing the Company's authorized capital
from 6,000,000 shares of no par value common stock to 50,000,000 shares
of no par value common stock.
(3) To consider and act upon 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 25, 2000 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 THE COMPANY THE
NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO OBTAIN A QUORUM AT THE ANNUAL
MEETING.
Sincerely,
/s/CHRIS A. BRUEHL
------------------------------
Chris A. Bruehl, Secretary
Albuquerque, New Mexico, January 26, 2000.
<PAGE>
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 suite 490, 1650 University Blvd., N.E. Albuquerque, New Mexico on
March 10, 2000 at 9:30 a.m., Mountain 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 February 7,
2000, but may also be made by telephone or oral communications by Directors,
Officers and employees of the Company. All costs of the solicitation will be
paid by the Company.
PROXIES AND VOTING AT THE MEETING
A majority of the outstanding shares of the Company's Common 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 25, 2000, 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 six 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. For the adoption of an amendment to Article IV of the Company's Articles
of Incorporation to provide that the Company shall have the authority to
issue 50,000,000 shares of common stock with no par value.
To be passed, this item must receive affirmative vote of a majority of the
votes cast in person and by proxy at the meeting.
<PAGE>
3. 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 at the close of business on January
25, 2000 or voting under authority granted by such record owner. All returned
proxies are counted toward the required quorum or the required percentages of
shares present at the meeting. 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, for the adoption of
an amendment to the Company's Articles of Incorporation, 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.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, certain information with respect to the security
ownership of certain beneficial owners and management of the Company's Common
Stock and Preferred Stock ("Voting Shares") as of January 25, 2000. As reported
by the Company's stock transfer agent, there were 2,893,838 shares of the
Company's Common Stock issued and outstanding at January 25, 2000.
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 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 possess sole voting and investment power with respect to the Voting
Stock indicated. <PAGE>
Shares Percent of
Beneficially Outstanding
Name and Address Owned Voting Shares
- --------------------------------------- ------------ -------------
Financial Services Group, Inc. (1) 650,000 20.4%
1650 University Blvd. NE, Suite 5-100
Albuquerque, New Mexico 87102
James A. Arias (1) 650,000 20.4%
1650 University Blvd. NE, Suite 5-100
Albuquerque, New Mexico 87102
Nortek, Inc. (2) 200,000 6.3%
50 Kennedy Plaza
Providence, RI 02903
Arthur A. Schwartz (6) 35,000 1.1%
401 East 80th Street
New York, New York 10021
Marshall Blumenfeld (6) 29,000 *
1338 Van Buren Street
Hollywood, Florida 33019
Bill E. Hooten (3)(4)(5) 270,714 8.5%
1650 University Blvd. NE, Suite 5-100
Albuquerque, NM 87102
MLPF&S CUST EPO (3)(4) 57,855 1.8%
Bill E. Hooten IRRA FBO
1650 University Blvd. NE, Suite 5-100
Albuquerque, NM 87102
Bill E. Hooten and Phyllis S. Hooten (3)(5) 212,859 6.7%
Revocable Trust UTA
1650 University Blvd. NE, Suite 5-100
Albuquerque, NM 87102
Martin S. Orland (6) 1,650 *
52 Centerville Rd.
Holmdel, New Jersey 07733
Noel Zeller (6) 35,000 1.1%
3 Justin Road
Harrison, New York 10528
Chris A. Bruehl (7) 1,000 *
1650 University Blvd. NE, Suite 5-100
Albuquerque, NM 87102
All Executive Officers and
Directors as a Group (3)(5)(8) 1,022,364 32.1%
- --------------
* less than 1%
<PAGE>
Notes to Beneficial Ownership Table
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. Nortek, Inc., a New York Stock Exchange listed company, acquired the shares
as a result of its previous purchase of Ply Gem, Inc., formerly a New York Stock
Exchange listed company. Realco, Inc. has no association with Nortek, Inc. in
any capacity.
3. The 57,855 Series A Preferred Shares and the 212,859 Series B Preferred
Shares have one vote on all matters that may come before a meeting of the
Shareholders. Upon the Offerings being declared effective by the SEC, the
holders of Series A and Series B Preferred Shares have the right to convert, at
any time, their Preferred Shares into Common Stock.
4. The Trust was established for the benefit of Bill E. Hooten as a roll over
account to accept the Series A Preferred Shares previously held in 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 Series B Preferred Shares into up to 420,488 shares of the
Company's Common Stock over which he has the right to exercise voting and
investment power.
6. Does not include options to purchase 15,000 shares of the Company's common
stock.
7. Does not include options to purchase 25,000 shares of the Company's common
stock.
8. Shares beneficially owned by all Executive Officers and Directors as a group,
include a total of 270,714 Series A and Series B Preferred Shares.
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.
PROPOSAL 1 - ELECTION OF DIRECTORS
At the Annual Meeting, the shareholders will elect six Directors to each serve
until the next annual or special meeting of shareholders at which directors are
elected. Information regarding each of Management's nominees for Director is as
follows:
JAMES A. ARIAS 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
<PAGE>
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. 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 and Audit Committee Member 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 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 has served as a Director of the Company since November, 1994.
For more than the past five years Mr. Schwartz has been President of Masters
Coverage Corp., a successor company of S&H Insurance Brokerage, Inc., of N.Y.,
an insurance broker located in New York, New York. Of which he had been
President and manager. Masters Coverage Corp. is a 50.01% owner of S&H Insurance
Brokerage, Inc., N.M., an insurance brokerage company 49.9% owned by the
Registrant located in Albuquerque, New Mexico.
MARSHALL BLUMENFELD has served as a Director of the Company since its formation
in September 1983. Mr. Blumenfeld was engaged in the private practice of law in
New York, New York, from 1963 until 1997 when he retired from the practice.
MARTIN S. ORLAND was first elected to the Board by the shareholders on March 21,
1997. Mr. Orland is currently self-employed, providing consulting and advisory
services. He retired January 1, 1997 as an employee of Fortis, Inc., where he
served as President of Fortis Private Capital, Inc., 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 corporation that
made investments in commercial real estate and mortgages. Each 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
served as Director of Continental Bank, a publicly traded financial institution.
These companies were subsequently sold. In 1997, Mr. Orland became a Director of
Quatro, Inc., a New Mexico based electronics company, and is also a Director of
three other privately owned companies.
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. <PAGE>
These nominees are also the Company's current Directors and each has agreed to
continue to serve as a Director if reelected by the Shareholders. Directors are
not currently paid fees for attending board meetings, but the Company reimburses
Directors for out-of-pocket expenses incurred in attending board meetings and
grants the Directors options to purchase Company stock from time to time under
its Key Employee Incentive Stock Option Plan.
All directors will 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.
The following table sets forth certain information concerning the Company's
current directors, who are also nominees and the Company's executive officers:
Name Age Position
------------------------ --- -------------------------------
James A. Arias(2) 61 President, CEO and Director
Bill E. Hooten 63 Executive Vice President and
Director
Chris A. Bruehl 31 Senior Vice President, CFO
and Secretary/Treasurer
Arthur A. Schwartz(1) 59 Director
Marshall Blumenfeld(1) 65 Director
Martin S. Orland(1) 66 Director
Noel Zeller(2) 63 Director
-----------------------------------
(1) Audit Committee member.
(2) Stock Option Committee member.
Background information for the executive officer, who is not also a director is
as follows:
CHRIS A. BRUEHL has served as Secretary and Treasurer of the Company since March
1999. Prior to that time, Mr. Bruehl was a Certified Public Accountant employed
as an Assurance Services Manager with Grant Thornton LLP, the Company's
independent public accountants for more than the past five years.
Meetings of the Board:
The Board typically holds quarterly meetings, but may hold other such meetings
as the business of the Company requires. During the past year the Board held
four meetings. All members attended at least 75% of the meetings.
MANAGEMENT RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE DIRECTOR
NOMINEES.
PROPOSAL 2 - AMENDMENT TO COMPANY'S ARTICLES OF INCORPORATION
Management, having reviewed the Company's Articles of Incorporation, believes
that the Article IV should be amended to increase the Company's authorized No
Par Value Common Stock from 6,000,000 shares to 50,000,000 shares. Management
<PAGE>
believes that additional authorized shares must be available to the Company to
permit it to maintain its growth.
As a result of the adoption of this proposed Amendment, in the future, each
shareholder's interest in the Company could be reduced through future issuances
of stock. Also, if such shares were issued for less than their book or market
value, each shareholder would experience a dilution in the value of his shares
by the amount of the discount from the book or market value that might result
solely because of the issuance of such additional shares. Management does not
believe that any shares of the Company's stock would be issued for less than
their book value, but cannot predict what effect on the market price of
currently outstanding shares the issuance of additional shares of stock might
have on the market value of all of the Company's shares.
MANAGEMENT RECOMMENDS THAT YOU VOTE FOR THIS AMENDMENT TO THE COMPANY'S ARTICLES
OF INCORPORATION.
INFORMATION TO ASSIST IN EVALUATING THE PROPOSALS
EXECUTIVE OFFICER 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, 1999, 1998 and 1997. No other executive officer
of the Company received total salary and bonus compensation in excess of
$100,000 for 1999 and no executive officers received long-term compensation.
Annual Compensation
- ---------------------------------------------------------------------------
Other Annual
Name and Principal Position Year Salary Bonus Compensation
- --------------------------- ----- -------- ------- -------------
James A. Arias, 1999 $ 93,000 $ 4,000 -
President, CEO, Chairman 1998 87,600 - -
of the Board(1) 1997 82,800 14,300 -
Bill E. Hooten, Executive 1999 120,000 - -
Vice President(2)(3) 1998 120,000 - -
1997 120,000 - -
Notes to Summary Compensation Table
(1) The Company pays Mr. Arias a monthly base salary, which increases annually
at the rate of 6% per annum as a cost of living adjustment. In addition, Mr.
Arias is to be paid an allowable bonus equal to 10% of pre-tax earnings in
excess of $400,000 during any fiscal year.
(2) 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 1999, 1998 and 1997. She was also furnished a car that is leased by the
<PAGE>
Company for $472 per month. None of this compensation paid or furnished to Mrs.
Hooten is included in the totals of the compensation paid to Mr. Hooten.
Option Grants:
During 1999 the Company granted certain of its executive officers and directors
options under its Key Employee Incentive Stock Option Plan as follows:
Option/SAR Grants in Last Fiscal Year
- -----------------------------------------------------------------------------
Individual grants
- -----------------------------------------------------------------------------
Number of Percent of Total
Securities Options/SARs Exercise
Underlying Granted to or Base
Option/SARs Employees in Price Expiration
Name Granted(#) Fiscal Year ($/Sh) Date
- ------------------- ----------- ---------------- -------- ----------
Chris A. Bruehl 25,000 24% $ 3.00 03/05/04
Arthur A. Schwartz 5,000 5% 3.30 03/09/04
Marshall Blumenfeld 5,000 5% 3.30 03/09/04
Martin S. Orland 5,000 5% 3.30 03/09/04
Noel Zeller 5,000 5% 3.30 03/09/04
Option/SAR Grants in Last Fiscal Year (continued)
- -----------------------------------------------------------------------------
Potential Realized
Value at Assumed
Annual Rates of Stock Alternative:
Price Appreciation Grant Date
for Option Term Value *
- -----------------------------------------------------------------------------
* * Grant Date
5%($) 10%($) Present Value
--------- --------- -------------
Chris A. Bruehl $ 36,250
Arthur A. Schwartz 6,950
Marshall Blumenfeld 6,950
Martin S. Orland 6,950
Noel Zeller 6,950
- --------------
* The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes option pricing model, with the following weighted
average assumptions: dividend yield rate of zero, expected volatility of 58%,
risk free interest rate of 5.5% and an expected life of one year.
Option Exercises and Year End Values:
The table below sets forth, certain information regarding the value of options
held by certain Executive Officers and Directors at September 30, 1999. There
were no options exercised by Executive Officers and Directors during the fiscal
year ended September 30, 1999. <PAGE>
Aggregated Option Fiscal Year End Values
- -----------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
September 30, 1999 September 30, 1999
-------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ----------- ------------- ----------- -------------
Chris A. Bruehl - 25,000 $ - $ -
Arthur A. Schwartz 10,000 5,000 - -
Marshall Blumenfeld 10,000 5,000 - -
Martin S. Orland 10,000 5,000 - -
Noel Zeller 10,000 5,000 - -
Employment Agreements:
In March 1995, at the time of the Company's reorganization, Mr. Hooten and the
Company entered into an employment agreement, which expires in March 2000.
Pursuant to the terms of this agreement, Mr. Hooten receives an annual salary of
$120,000 per year.
The Company has also executed several at-will employment agreements with key
employees of the Company.
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 meetings and grants them options to purchase Company
common stock from time to time under its Key Employee Incentive Stock Option
Plan.
Price Performance Graph:
The following graph compares the total cumulative return of the Company's Common
Stock with the S&P SmallCap 600 Index, the S&P Services (Commercial and
Consumer) Index and the S&P Homebuilding Index. The total cumulative return for
each period is based on the investment of $100 on February 2, 1996, assuming
compounded daily returns and the reinvestment of all dividends. The Company's
Common Stock began trading on February 2, 1996.
[The following table was represented by a graph in the printed material]
S&P Services
Company S&P (Commercial S&P
Common SmallCap and Consumer) Homebuilding
Stock 600 Index Index Index
------- --------- ------------ ------------
February 2, 1996 $ 100 $ 100 $ 100 $ 100
September 30, 1996 48 115 110 89
September 30, 1997 50 157 128 132
September 30, 1998 27 133 110 148
September 30, 1999 31 156 104 125
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the past year the Company was a party to the following transaction in
which a certain officers and director had a material interest:
The Company leased office space from Mr. Hooten for certain operations of its
real estate brokerage operations. Such rental was on a month-to-month basis, at
a rate determined by an independent appraisal resulting in annual rental expense
of approximately $95,000. The Company terminated this lease agreement in
September 1999, and there will be no payments made to Mr. Hooten under this
arrangement for fiscal 2000.
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.
ADDITIONAL COMPENSATION ARRANGEMENTS
In addition to the Key Employee Stock Incentive Plan discussed above, the
Company established a 401(k) retirement plan effective January 1, 1999, for the
benefit of all Company employees. Pursuant to the Plan, the Company will
contribute up to 25% of employee contributions, not to exceed $1,500. There are
currently no other plans, arrangements, commitments or understandings with
respect to the establishment of any plan or program.
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.
INDEPENDENT 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 on Form 10-K and preparation of the
Company's Federal and state income tax returns. A representative of Grant
<PAGE>
Thornton LLP will be available by conference call at the Annual Meeting, to
respond to appropriate questions concerning the financial statements of the
Company.
PROXY MATERIALS FOR NEXT ANNUAL MEETING
Shareholder proposals for consideration at the next Annual Meeting, which the
Company expects to hold in March, 2001, must be received by the Company no later
than August 30, 2000. 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/ CHRIS A. BRUEHL
--------------------------
Chris A. Bruehl, Secretary
Albuquerque, New Mexico, January 26, 2000.
ON WRITTEN REQUEST, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF ITS
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999, FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING THE AUDITED 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 25, 2000. ANY
SUCH WRITTEN REQUEST SHOULD BE ADDRESSED TO CHRIS A. BRUEHL, SECRETARY, REALCO,
INC., 1650 UNIVERSITY BOULEVARD, N.E., SUITE 5- 100, ALBUQUERQUE, NEW MEXICO
87102.
<PAGE>
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF REALCO, INC. to be held on March 10,
2000 at 9:30 a.m. Mountain Time, in Suite 490, at 1650 University Blvd.,
Albuquerque, New Mexico.
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 designated below, all of the
stock of REALCO, INC. owned of record by the undersigned on January 25, 2000 at
the 2000 Annual Meeting of Shareholders to be held on March 10, 2000, and at any
postponement(s) thereof, for the election of six 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 SIX NOMINEES:
[ ] JAMES A. ARIAS, BILL E. HOOTEN, ARTHUR A. SCHWARTZ, MARTIN S. ORLAND
MARSHALL BLUMENFELD, AND NOEL ZELLER.
[ ] 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. AMENDMENT TO COMPANY'S ARTICLES OF INCORPORATION:
[ ] FOR [ ] AGAINST
3. 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 YOUR
NAME AS YOU NORMALLY SIGN YOUR NAME AND DATE YOUR PROXY.
- ----------------------------------------
SIGNATURE
DATE______________________,2000
- ----------------------------------------
SIGNATURE OF CO-OWNER (IF APPLICABLE)
DATE________________,2000
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
SIGN TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN IN THE COMPANY 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 BLVD. N.E., SUITE 5-100
ALBUQUERQUE, NEW MEXICO 87102
