As filed with the Securities and Exchange Commission
on June 9, 1997
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MACE SECURITY INTERNATIONAL, INC.
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(Exact name of registrant as specified in charter)
Delaware 03-0311630
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(State or other (IRS Employer
jurisdiction of I.D. Number)
incorporation)
160 Benmont Avenue
Bennington, Vermont 05201
(802) 447-1503
--------------
(Address, including zip code and telephone number,
including area code, of registrant's principal executive offices)
MACE SECURITY INTERNATIONAL, INC.
NONQUALIFIED STOCK OPTION PLAN
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(Full title of plan)
Jon E. Goodrich
Chief Executive Officer
Mace Security International, Inc.
160 Benmont Avenue
Bennington, Vermont 05201
(802) 447-1503
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Please send copies of all communications to:
Germaine Curtin, Esq.
Herzog, Engstrom & Koplovitz, P.C.
99 Pine Street
Albany, New York 12207
(518) 465-7581
Calculation of Registration Fee
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<PAGE>
<TABLE>
<CAPTION>
Amount
Proposed Proposed maximum of
Title of securities Amount to be maximum offering aggregate offering Registration
to be registered registered (1) price per share (2) price Fee
<S> <C> <C> <C> <C>
Common Stock,
par value $0.01 6,300 5.50 34,650 10.50
share 330,000 1.50 495,000 150.00
30,000 1.25 37,500 11.36
50,000 1.1875 59,375 17.99
213,700 1.00 213,700 64.76
-------
Total 630,000
=============================================================================================
</TABLE>
(1) Pursuant to Rule 416 of the Securities Act of 1933 (the "Securities Act"),
this Registration Statement also covers such additional Common Stock, par value
$0.01 per share (the "Common Stock"), as may become issuable pursuant to the
anti-dilution provisions of the Mace Security International, Inc. Nonqualified
Stock Option Plan, as amended (the "Plan").
(2) Pursuant to paragraph (h) of Rule 457 of the General Rules and Regulations
under the Securities Act, the filing fee has been calculated by using the
exercise price for options currently outstanding and, for those not yet issued,
on the basis of $1.00 the last reported sale price of such securities on the
NASDAQ Stock Market on July 17, 1997, which date is within five business days
prior to filing.
EXPLANATORY NOTE
This Registration Statement contains two parts: the first part contains a
Prospectus prepared in accordance with the requirements of Part I of Form S-3
(in accordance with Section C of the General Instructions to Form S-8) which
covers re-offers and re-sales of Common Stock of the Company to be issued upon
exercise of options granted or to be granted under the Plan and sold by certain
Control Persons as hereafter defined.
The second part contains information required in the Registration
Statement pursuant to Form S-8.
FORM S-3 ITEM AND HEADING LOCATION IN PROSPECTUS
I. Forepart of the Registration Statement and Front Cover Page
Outside Front Cover Page of Prospectus
II. Inside Front and Outside Back Cover Pages Inside Front Cover Page
of Prospectus
III. Summary Information, Risk Factors and The Company and Risk Factors
Ratio of Earnings to Fixed Charges
IV. Use of Proceeds Use of Proceeds
V. Determination of Offering Price Not applicable
VI. Dilution Not applicable
VII. Selling Security Holders Selling Stockholders
VIII. Plan of Distribution Plan of Distribution
1
<PAGE>
IX. Description of Securities to be Registered Not applicable
X. Interests of Named Experts and Counsel Legal Matters; Experts
XI. Material Changes Not applicable
XII. Incorporation of Certain Information by Incorporation of Certain
Reference Documents by Reference
XIII. Disclosure of Commission Position on Indemnification
Indemnification for Securities Act
Liabilities
2
<PAGE>
Reoffer Prospectus
---------------------------------------
MACE SECURITY INTERNATIONAL, INC.
---------------------------------------
160,000 Shares
COMMON STOCK
(Par Value $0.01 Per Share)
---------------------------------------
This Prospectus is being used in connection with the offering, from time
to time, by certain shareholders (the "Selling Shareholders") of Mace Security
International, Inc. (the "Company"), of shares of common stock, par value $0.01
per share, (the "Common Stock") of the Company which may be acquired pursuant to
the exercise of options granted, from time to time, to certain directors, former
employees, employees, distributors and consultants of the Company under the Mace
Security International, Inc. Nonqualified Stock Option Plan, as amended (the
"Plan") who, at the time of resale are Control Persons of the Company (the
"Options"). A Control Person is any Company director or executive officer or
beneficial owner of more than ten percent (10%) of the Company's outstanding
shares of Common Stock. Currently, options to purchase 160,000 shares of Common
Stock are held by Control Persons. The shares are issuable to the Selling
Shareholders pursuant to and upon the exercise of Options granted or to be
granted under the Plan. The Company will receive $1.50 for 130,000 of the shares
issued upon the exercise of the currently outstanding Options and $1.25 for
30,000 of such shares. The Company will not receive any of the proceeds from the
sale of the shares by the Selling Shareholders. All expenses of registration
incurred in connection with this offering are being borne by the Company, but
all selling and other expenses incurred by the Selling Shareholders in
connection with the sale of the shares will be borne by them.
The Company is not aware of any underwriting arrangements with respect to
the sale by the Selling Shareholders of any of the shares offered herein.
The issued and outstanding Common Stock of the Company is listed on The
NASDAQ Stock Market ("NASDAQ"). Shares of Common Stock which may be issued upon
exercise of Options will also be listed NASDAQ. On July 17, 1997, the last sale
prices of the Common Stock on the NASDAQ was $1.00 per share. The shares may be
offered by or for the account of the Selling Shareholders, from time to time, on
NASDAQ or on any stock exchange on which the shares may be listed at the time of
sale, in negotiated transactions, or through a combination of such methods of
sale, at fixed prices which may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices, or at
negotiated prices. The Selling Shareholders may effect such transactions by
selling shares to or through broker-dealers who may receive compensation in the
form of discounts, concessions, or commissions from the Selling Shareholders
and/or the purchaser of shares for whom such broker-dealers may act as agent or
to whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). Any broker-dealer
acquiring shares from a Selling Shareholder may sell such shares in its normal
market making activities, through other brokers on a principal or agency basis,
in negotiated transactions, or through a combination of such methods. (See
"Selling Shareholders" and "Plan of Distribution.")
FOR INFORMATION CONCERNING THE COMPANY'S CURRENT FINANCIAL POSITION AND
OTHER IMPORTANT FACTORS, SEE "RISK FACTORS" AND "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
THE PURCHASE OF SECURITIES BEING OFFERED HEREBY IS SUBJECT TO CERTAIN
MATERIAL RISKS. SEE "RISK FACTORS".
- -------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
COMMISSION, OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- -------------------------------------
THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVE INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
The date of this Prospectus is July 17, 1997.
<PAGE>
No person has been authorized to give any information or to make any
representation not contained in this Prospectus, and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the shares offered by
this Prospectus or an offer to sell or a solicitation of an offer to buy such
shares in any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of the Company or
that the information herein is correct as of any time subsequent to the date
hereof.
TABLE OF CONTENTS
Page No.
--------
Available Information 1
Incorporation of Certain Documents by Reference 1
The Company 2
The Offering 3
Risk Factors 4
Use of Proceeds 8
Selling Shareholders 8
Plan of Distribution 9
Indemnification 9
Experts 10
Legal Matters 10
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission "). Such reports, proxy
statements, and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices: the Northeast
Regional Office, Seven World Trade Center, Suite 1300, New York, New York 10048,
and the Midwest Regional Office, Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies of such material can be obtained by
written request from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, or at the Company's main office at 160
Benmont Avenue, Bennington, Vermont 05201, and the Company's reports and proxy
statements may be inspected at such offices.
A registration statement on Form S-8, together with all amendments,
exhibits and documents incorporated therein by reference (the "Registration
Statement"), has been filed with the Commission, Washington, D.C., under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
shares offered by this Prospectus as well as other shares issued or to be issued
to the Plan. This Prospectus does not contain all the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. Statements in this Prospectus
as to the contents of exhibits are not necessarily complete, and each statement
is qualified in all respects by reference to the copies of documents filed or
incorporated by reference as exhibits to the Registration Statement or otherwise
filed with the Commission. (See also "Incorporation of Certain Documents by
Reference.")
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents (or parts thereof) filed with the Commission by
the Company are incorporated by reference in this Prospectus:
(a) The Company's Annual Report on Form 10-K SB for the fiscal year ended
December 31, 1996 as filed with the Commission on April 15, 1997 (Commission
File No.69270-NY).
(b) The Company's Quarterly Report on Form 10-QSB for the fiscal quarter
ended March 31, 1997 as filed with the Commission on May 15, 1997 (Commission
File No. 69270-NY).
(c) The description of the Company's securities contained in the Company's
Registration Statement on Form SB-2 as filed with the Commission on November 12,
1993.
All documents filed by the Company pursuant to Sections 13(a), 13(c), or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
filing of a post-effective amendment indicating that all of the shares offered
hereby have been sold, or deregistering all of the shares that, at the time of
such post-effective amendment, remain unsold, shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained herein or in any document
incorporated by reference herein which is deemed to be modified or superseded,
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company shall furnish without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, copies of any or all of the documents
which are incorporated by reference herein (other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
such documents). Written or telephone requests for such documents should be
directed to the Corporate Secretary, Mace Security International, Inc., 160
Benmont Avenue, Bennington, Vermont 05201, telephone (802) 447-1503.
1
<PAGE>
THE COMPANY
Mace Security International, Inc. (the "Company") is a well known producer
of less-lethal defense sprays for the Consumer and Law Enforcement markets and a
marketer of consumer safety and security products. The Company also supplies
chemical munitions and accessories to law enforcement, correctional and military
agencies (the "Law Enforcement market") throughout the world and conducts
training for all types of professionals responsible for the management and
control of violent behavior in individuals. These programs encompass basic and
specialized use of force and weapons training, including chemical munitions and
aerosols.
The original Mace(R) brand defense spray was developed in 1965 for use as
a safe, effective, and humane deterrent against physical attack, but was sold
primarily to the Law Enforcement Market (by a third party unrelated to the
Company) prior to late 1987, when the Company was established and acquired an
exclusive license to market products for the civilian consumer market the
("Consumer market") under the Mace(R) brand name in the continental United
States. Although not actively promoted in the Consumer market, therefore, until
1988, the Mace(R) brand registered trademark has become one of the country's
most widely recognized brand labels.
In March 1994, the Company acquired substantially all of the assets, and
assumed certain of the liabilities of, the Federal Laboratories division of
TransTechnology Corporation. As a result of that acquisition, the Company is now
a leading manufacturer and distributor of tear gas grenades, projectiles and
sprays for the Law Enforcement market worldwide. The division offers a full line
of chemical munitions and accessories designed for outdoor crowd distribution
and confined area use as well as for riot and barricade situations. The Company
owns the trademarks: Federal Laboratories(R), TG Guard(R), Guard(R),
Triple-Chaser(R), Skat Shell(R), Ferret(R), Mini- Streamer(R) and MPG.
The Company's long term goal is to maximize profitability by: generating
planned growth in the Consumer and Law Enforcement markets through product
diversification, planning for and meeting the challenges of the ever changing
and competitive business climate, and striving to enlarge market share and
expand distribution channels within each product category.
Products and Lines of Merchandise
The Company designs, markets and sells its Consumer product line for use
in protection of the home and automobile, and for personal and child protection.
These products include a line of personal alarms, whistles, window and door
security alarms and defense sprays.
The Company's Law Enforcement product line of chemical munitions consists
of, among others, defense sprays, tear gas smoke grenades, projectiles,
launchers, stun munitions and protective masks. The Company's Law Enforcement
market includes any organization that deals with violent individuals or
situations.
Distribution/Market Segments for Security Products and Services
Distribution of the Company's products and services is aimed at two
distinct segments/markets: Consumer and Law Enforcement.
The Company's sales efforts are coordinated by a team of in-house sales
and support personnel dealing with a network of manufacturers' representatives
and buyers for a variety of distributors and retail accounts.
Consumer Market
2
<PAGE>
The Company's in-house sales and support staff work with a nationwide
network of manufacturers' representative groups and sells directly to wholesale
distributors. Significant retail accounts are generally handled directly by the
Company as are mail order and specialty accounts.
The Company's Consumer Market includes: mass merchants/department stores,
consumer catalogues and guns/sporting goods, hardware, auto, convenience, and
drug stores. Each market category is reached through a dedicated group of
in-house sales managers, and/or through manufacturers' representatives. Market
categories are also reached through catalogue, magazine and trade publication
advertising and promotion at industry trade shows.
The Company has realized limited success in exporting its Consumer product
line.
Law Enforcement Market
The Company's Law Enforcement sales are conducted mainly through a network
of manufacturers' representative groups, wholesale law enforcement distributors
and directly to various governmental agencies. Additionally, sales are conducted
through hundreds of smaller distributors and dealers specializing in the Law
Enforcement supply business. International Law Enforcement sales are primarily
generated through bidding processes from a variety of law enforcement,
correctional and military agencies. Law Enforcement sales continue to be "high
profile" sales for the Company and act as the foundation for the level of market
recognition enjoyed by the Mace(R) brand consumer products.
The Company markets its Law Enforcement products in over 50 countries
worldwide. The majority of the international sales for 1996 and 1995, which
totaled approximately $3,157,000 and $4,735,000 respectively, were from the
Federal Laboratories(R) product line.
The Company continued to expand its training division course offerings
with the introduction in 1996 of an advanced level of training programs. The
training division acts in concert with the Law Enforcement sales group to
generate familiarity with the Company's product line for the Law Enforcement
market.
The Company is incorporated in Delaware, and its principal executive
offices are located at 160 Benmont Avenue, Bennington, Vermont 05201. The
telephone number is (802) 447-1503.
THE OFFERING
Securities Offered 160,000 Shares of Common Stock,
by Selling Shareholders........... par value $.01 per share
Common Stock Outstanding.......... 6,825,000 Shares (1)
NASDAQ Symbol..................... Mace (2)
- ----------
(1) Does not include 630,000 shares of Common Stock reserved for issuance
pursuant to the Plan under which securities offered pursuant to this
Prospectus were or are to be issued, 75,000 shares of Common Stock
reserved for issuance upon the exercise of warrants issuable to the
underwriter of the Company's initial public offering (the "Underwriter
Warrants") or 60,000 warrants issued in connection with the acquisition of
the assets of Kindergard Corporation.
(2) Listing on NASDAQ provides no assurance that an active and liquid trading
market for the Common Stock will be maintained.
3
<PAGE>
Proceeds
All of the proceeds of the offering will be received by the Selling
Stockholders.
Risk Factors
Investment in the shares involves a high degree of risk. (See "Risk
Factors".)
RISK FACTORS
Prospective investors, prior to purchasing any shares offered hereby,
should consider carefully the specific factors set forth below, as well as the
other information regarding the Company appearing elsewhere in this Prospectus.
Voting Control by Existing Stockholders and Management
Jon E. Goodrich, the Company's President and CEO, Marvin P. Brown, the
Company's newly appointed Chairman of the Board and Robert P. Gould, former
director and significant shareholder, are parties to a voting agreement that
covers in excess of 50% of the outstanding Common Stock of the Company. In
addition, the parties individually own additional shares of the Company's Common
Stock, constituting an aggregate of approximately 56% of the Company's
outstanding Stock. Neither the Company's Certificate of Incorporation nor its
by-laws provide for cumulative voting. Consequently, such persons control the
affairs of the Company, including the recent reappointment of Mr. Goodrich as
President, the appointment of Mr. Brown as Chairman, the replacement of the
recently resigned Board members, and the ability to: reelect themselves to the
Board of Directors; enter into transactions with their affiliates and related
parties; appoint themselves as executive officers; and approve or prevent any
proposed merger, sale of assets or other business combination.
Conflicts of Interest
The Company has ongoing business relationships with companies that are
owned by various members of management or shareholders, or both, including
Messrs. Goodrich and Gould, the parties to the voting agreement that controls in
excess of 51% of the outstanding stock (see "Voting Control by Existing
Stockholders and Management"). While current management believes that the
current arrangements are beneficial to the Company, such arrangements present
conflicts of interest and, potentially, could result in agreements that would
not be as beneficial to the Company as agreements made on an arms-length basis.
Safety; Product Liability
Although the Company has not been held liable for any permanent physical
injury caused by the Company's defense sprays, the Company is the subject of
several claims of injury and death allegedly resulting from its defense sprays.
The Company does not anticipate that any of these claims will result in the
payment of damages in excess of the Company's insurance coverage. Furthermore,
the Company understands that the Federal Justice Department is studying the role
that pepper defense sprays, other than those sold by the Company, may have had
in the deaths of suspects sprayed by law enforcement personnel. Furthermore, the
Company is aware of several claims that defense sprays used by law enforcement
personnel resulted in deaths of prisoners and of suspects in custody. Moreover,
the Company believes that the efficacy of defense spray products is affected by
the target's size, state of rage, degree of intoxication and tolerance for pain,
and includes comments to that effect in product packaging. The Company believes
that the increasing use of defense sprays by the public and law enforcement
could, in the future, lead to additional product liability claims.
4
<PAGE>
The Company maintains product liability insurance which covers the Company
and its dealers against certain product liability claims. However, there is no
assurance that the Company's insurance coverage will be adequate in the event of
a valid claim, or that publicity surrounding such claims might not adversely
affect the Company.
Although the Company is not aware of any substantial claim of permanent
personal injury from its products, the Company is aware of recent reports of
incidents in which, among other things, defense sprays have been mischievously
or improperly used, in some cases by minors, have not been instantly effective
or have been ineffective against enraged or intoxicated individuals. Incidents
of this type, or others, could give rise to product liability or other claims,
or to claims that past or future advertising, packaging or other practices
should be, or should have been, modified, or that regulation of products of this
nature should be extended or changed.
Dependence on Continued Demand for Defense Sprays
Sales of defense sprays to the Consumer and Law Enforcement markets
accounted for over 40% of the Company's total sales in 1996. Accordingly,
despite the Company's acquisition and expansion of its Federal Laboratories
division, marketing of new security products internally developed or obtained
through acquisition, any significant decreased demand in the defense spray
market, whether due to negative publicity, government regulation, law
enforcement policies or otherwise, could have a material adverse effect on the
Company's results of operations.
Media Coverage
The Company believes that negative media coverage of defense sprays,
including stories questioning the safety or efficacy of defense sprays (such as,
for example, the effect of the target's size, state of rage or degree of
intoxication and tolerance for pain), may have a material adverse effect on
sales. Furthermore, the Company believes that its sales could also be adversely
affected by a decline in media coverage of violent crime.
Regulation
The distribution, sale, ownership, and use of Consumer defense sprays are
legal in 50 states and the District of Columbia. On January 1, 1996, California
eased restrictions on the sale of defense sprays. On November 1, 1996, New York
lifted an overall ban on defense sprays, allowing for the sale of oleoresin
capsicum (oc) only in licensed pharmacies and licensed gun stores. Massachusetts
requires both users and sellers to be licensed. Wisconsin allows the sale of oc
pepper sprays only and they must be sold from behind a counter or under glass.
Michigan does not permit sales of chloroacetephenane (CN) sprays. Nevada permits
sales of orthocholorobenzalmalo nonitrite (CS) sprays only. Sales to minors are
restricted in many states. Any significant legislative restrictions on the sale,
distribution or use of defense sprays or violations of those restrictions, could
have a material adverse effect on sales.
Environmental Matters
Some of the Company's manufacturing operations currently incorporate
particular compounds, the use and emission of which is regulated by various
state and federal environmental protection agencies, including the Environmental
Protection Agency. In addition, the Company generates hazardous waste as a
by-product of manufacturing certain products of its Federal Laboratories(R)
line. The Company believes that it is in compliance with all state and local
statutes governing the disposal of such hazardous material through its contract
with a licensed hazardous material disposal company. If, for any reason, there
are any changes in environmental permit or regulatory requirements, or if the
Company fails to comply with the permit and regulatory requirements, including
those relating to the disposal of hazardous materials, such factors may restrict
the Company's ability to continue or expand certain of its operations and may
result in a material adverse effect on the Company's business and financial
condition.
5
<PAGE>
Mace Trademark Protection
An essential part of the Company's business strategy has been to
capitalize on, promote heavily, and enhance the public's awareness and
confidence in the Mace(R) brand trademark. The Company relies on the trademark
laws to protect its proprietary rights to the Mace(R) label, and monitors and
takes action to protect its interest in the Mace(R) trademark. The Company uses
a newspaper clipping service to identify significant unauthorized uses of the
Mace(R) trademark and provides notice to such users of the Company's willingness
to take legal action for continued unauthorized use. All of the Company's
distributors are authorized to use the Mace(R) brand trademark for advertising.
There can be no assurance that the efforts taken by the Company to protect its
proprietary rights will be adequate to prevent misappropriation or that the
frequent use of the Mace(R) brand name by the public as an encompassing
description of defense sprays will not jeopardize its proprietary status. In
addition, although the Company has registered its Mace(R) brand trademark in
certain international markets, protection of such marks outside the United
States may raise legal and practical difficulties and there can be no assurance
that the Company will be successful in enforcing rights in international
markets.
Competition
The Company faces intense competition in both the Consumer and Law
Enforcement markets.
Domestically, there continues to be a large number of companies marketing
defense sprays to civilian consumers. While the Company continues to offer
defense spray products that Management believes distinguish themselves through
brand name recognition, product features and formulations and research and
development, the Consumer division has experienced a sales decline for these
products. The Company attributes this decline not only to strong competition,
but also to lower demand in general.
The Law Enforcement market is also highly competitive. Then number of
competitors remains small, but departmental bidding processes and related sales
expenses continually put pressure on pricing and margins. By combining the well
recognized names of Mace Security International and Federal Laboratories,
Management believes it is in a strong position to compete in the worldwide Law
Enforcement market.
Dividends
The Company does not anticipate paying dividends in the foreseeable
future. If and when any dividends are paid, over 55% of all dividends paid to
stockholders would inure to the members of management, assuming the percentage
of ownership of the Common Stock remains constant.
Working Capital
On October 31, 1996, the Company entered into a credit agreement with
KeyBank National Association which provides for a maximum of $2,000,000 of
credit (the "Credit Agreement") and is subject to a borrowing base formula. The
amounts outstanding under the Credit Agreement are secured by virtually all of
the Company's presently owned and after-acquired assets.
The Credit Agreement contains various financial and subjective covenants
that are measured at each fiscal quarter end. As of December 31, 1996, the
Company was in violation of most of the financial ratios and the subjective
covenants. The Company has obtained a waiver of these violations for the year
ended December 31, 1996 and for the quarter ended March 31, 1997. As partial
consideration for the waiver, the Company agreed, in April 1997, to
modifications of the definition of the borrowing base set forth in the Credit
Agreement. As so modified, the borrowing base formula is 50% of eligible
accounts receivable in excess of $3,000,000. The Company has not had eligible
accounts receivable in excess of $3,000,000 and, consequently, does not expect
to be entitled to borrow any amounts under the line of credit facility.
6
<PAGE>
The Company believes it has adequate cash to meet its needs for the second
quarter of 1997. The Company anticipates that it will be in covenant violation
of the Credit Agreement as of June 30, 1997, and does not expect to obtain an
additional waiver. In that event, it is likely that the Bank will accelerate the
amounts due under the term loan, and the entire amount will become due and
payable at that time. The Company intends to pay off the amounts due to the Bank
under the term loan with proceeds from alternate bank financing, the issuance of
debt securities or other forms of external financing. The Company is currently
negotiating with other financial institutions, but no commitment has been
obtained. There can be no assurance that alternate financing will be obtained.
Subsequent to year end, the Company's President and the Chairman of the
Board supplied the Company with lines of credit for up to $375,000 each
($750,000 in total) with interest at prime plus 1.25%. The lines of credit
expire in April 1998 at which time all accrued interest and unpaid principal
will be due and payable. The line of credit will be payable at an earlier date
if the Company obtains a bank line of credit or similar financing in the amount
of at least $750,000. The Company believes that these lines of credit will be
adequate to meet its operating needs over the next twelve months and the
repayment of the KeyBank National Association term loan if payment is demanded
after June 30, 1997.
Shares Eligible for Future Sale
The Company has 6,825,000 shares of Common Stock outstanding of which
1,725,000 were issued in the Company's initial public offering, 241,300 were
gifted by founding stockholders, 580,000 shares were issued to TransTechnology
Corporation in connection with the acquisition of the assets of the Federal
Laboratories division, and 20,000 shares were issued to a former president. The
Company has an additional 11,175,000 shares available for issuance of which
630,000 shares have been reserved for issuance pursuant to the Plan, 75,000
shares and for the exercise of Underwriter Warrants, and 60,000 shares for the
exercise of warrants issued in conjunction with the acquisition of the assets of
Kindergard Corporation.
Shares reserved for issuance upon the exercise of the Underwriter Warrants
and the Kindergard Warrants, shares of outstanding Common Stock that were not
sold to the public in the initial public offer, or that have not been previously
sold pursuant to Rule 144 or that will not be issued pursuant to the Plan, will
be available for public sale if registered or sold pursuant to an exemption from
registration, including Rule 144 or Rule 144A promulgated under the Securities
Act, which governs sales of restricted securities.
Sales of substantial amounts of the Common Stock in the public market, or
the availability of substantial amounts of the Common Stock for such sale, could
adversely affect the prevailing market price of the shares.
Certain Provisions in the Certificate of Incorporation which Inhibit Takeovers
The Company's Certificate of Incorporation and by-laws provide for "blank
check" preferred stock, with certain restrictions. The ability of the Company to
issue or undertake to issue shares of such preferred stock, without further
stockholder approval, may inhibit a change in control of the Company if, for
example, the Company may thereby issue rights to acquire, or securities
convertible into, Common Stock or other securities of the Company or of a
potential acquirer. In such event, the cost to a potential acquirer to purchase
a majority or more of the Common Stock would increase significantly and may
deter a potential acquirer from offering a premium price of shares of Common
Stock. However, the by-laws presently prohibit the conversion of preferred stock
into Common Stock at less than 80% of the fair market value of the Common Stock
on the date of issuance, among other things.
7
<PAGE>
The Company is subject to Section 203 of the Delaware General Corporation
Law which prohibits a publicly held Delaware corporation from engaging in a
"business combination" with a person who is an "interested stockholder" for a
period of three (3) years, unless approved in a prescribed manner.
Ability to Issue Additional Shares
The 10,410,000 authorized and unreserved shares of Common Stock available
for issuance may be issued from time to time upon authorization of the Board of
Directors, without further approval by the stockholders unless required by
applicable law. The issuance of such shares of Common Stock by the Company
would, and the issuance of the 2,000,000 available shares of Preferred Stock
may, result in the dilution of the voting power of the shares of Common Stock
purchased in this Offering.
Possible Volatility of Stock Price
The equity markets have, on occasion, experienced significant price and
volume fluctuations which have affected the market price for many companies'
securities and which have been unrelated to the operating performance of these
companies. Furthermore, the results of operations of the Company in recent years
has also negatively impacted the market price for the Company's securities. The
Company's Common Stock was initially offered to the public at $5.50 per share in
November 1993. It has traded for as little as $.75 per share. The closing sales
price for the Common Stock on July 17, 1997 was $1.00. Any further fluctuations
could have a material adverse affect on the market price of the Common Stock.
USE OF PROCEEDS
The shares which may be sold under this Prospectus will be sold for the
respective accounts of each of the Selling Shareholders. Accordingly, the
Company will not realize any proceeds from the sale of the shares. The Company,
however, will derive net proceeds of approximately $232,500 if all of the
currently unexercised Options issued to Control Persons pursuant to the Plan are
exercised. Such proceeds will be available to the Company for working capital
and general corporate purposes. No assurance can be given, however, as to when
or if any or all of the Options will be exercised. (See "Selling Shareholders"
and "Plan of Distribution.")
SELLING SHAREHOLDERS
The following table sets forth (i) the name of each Selling Shareholder,
(ii) the nature of any position, office, or other material relationship which
each such Selling Shareholder has had with the Company or any of its affiliates
within the last three (3) years, (iii) the number of Shares offered for each
Selling Shareholder's account, and (iv) the number of Shares and the percentage
owned by each such Selling Shareholder after completion of the offering,
assuming that all Shares offered pursuant to this Prospectus are sold.
8
<PAGE>
<TABLE>
<CAPTION>
Selling Position with Number of Shares Number of Shares Percent of
Stockholder the Corporation Beneficially Owned Covered by this Shares to
Prior to Offering Prospectus be owned
post-offering
<S> <C> <C> <C> <C>
Marvin P. Brown(1) Chairman 170,388(3) 100,000 2.5%
Kenneth L. Blakey Vice President of 10,000(2) 10,000 *
International Law
Enforcement Sales
Neil Campolungo Director 10,000(2) 10,000 *
Bernard D. Graney, Vice President of 10,000(2) 10,000 *
Jr. Operations and Secretary
Virginia de Ganahl Director 40,000(2) 10,000 *
Russell
Tim Smith Treasurer 10,000(2) 10,000 *
James E. West Director 10,000(2) 10,000 *
</TABLE>
(1) Excludes shares owned by others and covered by a voting agreement to which
Mr. Brown is a party. (See "Risk Factors - Voting Control by Existing
Stockholders and Management.")
(2) Includes 10,000 shares underlying options.
(3) Includes 100,000 shares underlying options.
* Less than one percent of the outstanding shares of Common Stock.
PLAN OF DISTRIBUTION
The sales of the shares by the Selling Shareholders may be effected, from
time to time, on NASDAQ or on any stock exchange on which the shares may be
listed at the time of sale, in negotiated transactions, or through a combination
of such methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, or at negotiated prices. The Selling Shareholders may effect such
transactions by selling shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions,
or commissions from the Selling Shareholders and/or the purchasers of shares for
whom such broker-dealers may act as agent or to whom they sell as principal, or
both (which compensation as to a particular broker-dealer might be in excess of
customary commissions).
The Selling Shareholders and any broker-dealers that act in connection
with the sale of the shares hereunder might be deemed to be "Underwriters"
within the meaning of Section 2(11) of the Securities Act; any commissions
received by them and any profit realized on the resale of shares as principals
might be deemed to be underwriting compensation under the Securities Act.
Any broker-dealer acquiring shares from a Selling Shareholder may sell the
shares either directly, in its normal market-making activities, through or to
other brokers on a principal or agency basis, or to its customers. Any such
sales may be at prices then prevailing on the NASDAQ, at prices related to such
prevailing market prices, at negotiated prices, or at prices reflecting the
application of a combination of such methods.
9
<PAGE>
The Company has advised the Selling Shareholders that anti-manipulative
Rules 10b-5, 10b-6 and 10b-7 promulgated under the Exchange Act may apply to
their sales in the market. The Company has made available to the Selling
Shareholders copies of these rules, and has informed the Selling Shareholders of
the possible need for them to deliver copies of this Prospectus in connection
with their resales of the shares. The Selling Shareholders may indemnify any
broker-dealer that participates in transactions involving sale of the shares
against certain liabilities, including liabilities arising under the Securities
Act. Any commissions paid or any discounts or concessions allowed to any such
broker-dealers, and, if any such broker-dealer purchases shares as a principal,
any profits received on the resale of such shares may be deemed to be
underwriting discounts and commissions under the Securities Act.
Upon the Company's being notified by any Selling Shareholders that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a cross or block trade, a supplemental prospectus will be filed
under Rule 424(c) under the Securities Act, setting forth the name of the
participating broker-dealer(s), the number of shares involved, the price at
which such shares were sold by the Selling Shareholder, the commissions paid or
discounts or concessions allowed by the Selling Shareholder to such
broker-dealer(s), and where applicable, that such broker-dealer(s), did not
conduct any investigation to verify the information set out in this Prospectus.
Any shares which qualify for resale pursuant to Rule 144 promulgated under
the Securities Act may be sold under the Rule rather than pursuant to this
Prospectus.
There can be no assurance that the Selling Shareholders will sell all or
even any of the shares which may be offered by them or any of them hereunder.
INDEMNIFICATION
The Company's Certificate of Incorporation and By-laws, as amended,
contain provisions that provide for the indemnification of its directors and
officers to the fullest extent permitted by law. The Company's Certificate of
Incorporation also contains a provision that limits the personal liability of
its directors to the Registrant or its shareholders to the fullest extent
permitted by law.
In addition, the Company maintains insurance against certain liabilities
incurred by directors and officers of the Company while serving in their
capacities as such.
Reference is hereby made to Section 145 of the Delaware General
Corporation Law relating to indemnification of directors, officers, employees
and agents of a Delaware corporation.
Insofar as indemnification for liabilities arising under the Securities
Act, may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
EXPERTS
The balance sheets as of December 31, 1996 and 1995 and the statements of
operations, stockholders' equity, and cash flows for each of the two years in
the period ended December 31, 1996, incorporated by reference in this
prospectus, have been incorporated herein in reliance on the report of Coopers &
Lybrand, L.L.P., independent accountants, given on the authoruty of that firm as
experts in accounting and auditing.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
the Company by Herzog, Engstrom & Koplovitz, P.C., 99 Pine Street, Albany, New
York 12207
10
<PAGE>
FORM S-8
This Registration Statement relates to 630,000 shares of Common Stock, par
value $0.01 per share (the "Common Stock"), of Mace Security International, Inc.
(the "Registrant"), being registered for use under the Mace Security
International, Inc. Nonqualified Stock Option Plan, as amended, (the "Plan").
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Mace Security International, Inc. (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934 (the "Exchange
Act") and, accordingly, files periodic reports and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information concerning the Company filed with the Commission may be
inspected and copies may be obtained (at prescribed rates) at the Commission's
Public Reference Section, Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549.
The following documents are incorporated by reference in this Registration
Statement:
(a) The Company's Annual Report on Form 10-K SB for the fiscal year ended
December 31, 1996 as filed with the Commission on April 15, 1997 (Commission
File No. 69270-NY).
(b) The Company's Quarterly Report on Form 10-Q SB for the fiscal quarter
ended March 31, 1997, as filed with the Commission on May 15, 1997 (Commission
File No. 69270-NY).
(c) The description of the Company's securities contained in the Company's
Registration Statement on Form SB-2 as filed with the Commission on November 12,
1993.
ALL DOCUMENTS FILED BY THE COMPANY PURSUANT TO SECTIONS 13(A), 13(C), 14,
AND 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 AFTER THE DATE HEREOF AND PRIOR
TO THE TERMINATION OF THE OFFERING OF THE SHARES OF COMMON STOCK, PAR VALUE $.01
PER SHARE ("COMMON STOCK") SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN
THIS REGISTRATION STATEMENT, AND TO BE A PART HEREOF FROM THE DATE OF FILING OF
SUCH DOCUMENTS.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable, since the Common Stock is registered under Section 12 of
the Securities Exchange Act of 1934.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation and By-laws, as amended,
contain provisions that provide for the indemnification of its directors and
officers to the fullest extent permitted by law. The Company's Certificate of
Incorporation also contains a provision that limits the personal liability of
its directors to the Registrant or its shareholders to the fullest extent
permitted by law.
11
<PAGE>
In addition, the Company maintains insurance against certain liabilities
incurred by directors and officers of the Company while serving in their
capacities as such.
Reference is hereby made to Section 145 of the Delaware General
Corporation Law relating to indemnification of directors, officers, employees
and agents of a Delaware corporation.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, (the "Securities Act") may be permitted to directors,
officers or persons controlling the Company pursuant to directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
4.1 Mace Security International, Inc. Nonqualified Stock Option (the "Plan")
4.2 Amendment No. 1 to the Plan ("Amendment No. 1")
4.3 Form of Stock Option Agreement to be entered into with Optionees with
respect to Stock Options granted under the Plan
5 Opinion of Herzog, Engstrom & Koplovitz, P.C. as to the validity of the
Common Stock being registered
23 Consent of Herzog, Engstrom & Koplovitz, P.C. (appears in their opinion
filed as Exhibit 5)
23.1 Consent of Coopers & Lybrand, LLP Independent Certified Public Accountants
24 Power of Attorney
99.1 Minutes of the Board of the Shareholders' meeting at which the Plan was
approved
99.2 Minutes of the Board meeting at which Amendment No. 1 was approved
ITEM 9. UNDERTAKINGS
1. The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement.
(b) That, for the purpose of determining any liability under the
Securities Exchange Act of 1934, as amended, (the "Exchange Act") each such
post-effective amendment shall be deemed to be a new registration
12
<PAGE>
statement relating to the securities offered, and the offering of the securities
at that time to be the initial bona fide offering.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
2. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act ) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
3. The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
4. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the indemnification provisions described herein, or
otherwise, the Registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the Town of Bennington, Vermont, on July 17, 1997.
MACE SECURITY INTERNATIONAL, INC.
By: /s/ Jon E. Goodrich
-----------------------------
13
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
/s/ Jon E. Goodrich President, Chief Executive July 17, 1997
- ------------------------------ Officer and a Director
Jon E. Goodrich (Principal Executive Officer)
/s/ Marvin P. Brown Chairman of the Board July 17, 1997
- ------------------------------
Marvin P. Brown
/s/ Timothy D. Smith Principal Financial Officer July 17, 1997
- ------------------------------
Timothy D. Smith
/s/ Neil Campolungo Director July 17, 1997
- ------------------------------
Neil Campolungo
/s/ Virginia de Ganahl Russell Director July 17, 1997
- ------------------------------
Virginia de Ganahl Russell
/s/ James E. West Director July 17, 1997
- ------------------------------
James E. West
Marvin P. Brown, the undersigned attorney-in-fact, by signing his name
hereto, does sign and execute this Registration Statement on behalf of the
above-named officers and directors pursuant to a power of attorney filed with
the Securities and Exchange Commission as Exhibit 24 to this Registration
Statement.
July 17, 1997
By: /s/ Marvin P. Brown
----------------------------
Marvin P. Brown
Attorney-in-fact
14
<PAGE>
INDEX TO EXHIBITS
Sequential
Exhibit Description Page Number
- -------- ----------- -----------
4.1 Mace Security International, Inc. Nonqualified Stock Option
(the "Plan")
4.2 Amendment No. 1 to the Plan ("Amendment No. 1")
4.3 Form of Stock Option Agreement to be entered into with
Optionees with respect to Stock Options granted under the
Plan
5 Opinion of Herzog, Engstrom & Koplovitz, P.C. as to the
validity of the Common Stock being registered
23 Consent of Herzog, Engstrom & Koplovitz, P.C. (appears in
their opinion filed as Exhibit 5)
24. Power of Attorney
23.1 Consent of Coopers & Lybrand, LLP Independent Certified
Public Accountants
99.1 Minutes of the Board of the Shareholders' meeting at which
the Plan was approved
99.2 Unanimous written consent of directors and shareholders
approving Amendment No. 1.
15
MACE SECURITY INTERNATIONAL, INC.
FORM S-8
EXHIBIT 4.1
<PAGE>
MACE SECURITY INTERNATIONAL, INC.
NONQUALIFIED STOCK OPTION PLAN
<PAGE>
TABLE OF CONTENTS
1 Purpose and scope 1
2 Definitions 1
3 Stock to be Optioned 2
4 Administration of the plan 2
5 Eligibility 3
6 Option Price 3
7 Terms and Conditions of Options 3
(a) Services 3
(b) Time and Method of Payment 3
(c) Number of Shares 3
(d) Options Period and Limitations on exercise of Options 4
(e) Method of Exercise 4
8 Termination of Service 4
9 Rights in Event of Death 4
10 No Obligation to exercise Options 4
11 Nonassignability 5
12 Effects of Changes in the Stocks Subject to the Plan 5
13 Amendment and Termination of the Plan 5
14 Representation by Participant 6
15 Reservation of Shares of Stock 6
16 Effective Date 6
17 Governing Law 6
<PAGE>
MACE SECURITY INTERNATIONAL, INC.
NONQUALIFIED STOCK OPTION PLAN
1. PURPOSE AND SCOPE
The purposes of this plan are (1) to encourage stock ownership by
employees, directors, distributors and consultants of Mace Security
International, Inc. (the "Company"), (2) to provide an incentive for such
persons to expand and improve the profits and prosperity of the Company,
and (3) to assist the Company in attracting and retaining key personnel
through the grant of options to purchase shares of the Company's common
stock.
2. DEFINITIONS
Unless otherwise required by the context, the following terms used in the
Plan shall have the following meanings:
2.1 "Board" shall mean the Board of Directors of the Company.
2.2 "Committee" shall mean the Stock Option Plan Committee, which is appointed
by the Board, and which shall be composed of at least two members
appointed by the Board.
2.3 "Company" shall mean Mace Security International, Inc., a Delaware
corporation.
2.4 "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
2.5 "Option" shall mean a right to purchase stock, granted pursuant to the
Plan.
2.6 "Option Price" shall mean the purchase price for Stock under an Option, as
determined in Section 6 below.
2.7 "Participant" shall mean an employee, director or distributor of, or a
consultant to, the Company or any Subsidiary, to whom an Option is granted
under the Plan.
2.8 "Plan" shall mean this Mace Security International, Inc. Nonqualified
Stock Option Plan, as amended from time to time.
2.9 "Stock" shall mean the common stock of the Company, par value one cent
($0.01).
<PAGE>
2.10. "Stock Option Agreement" shall mean an agreement between the Company and a
Participant, setting forth the terms and conditions upon which an Option
is granted to the Participant.
2.11. "Subsidiary" shall mean:
(a) A subsidiary corporation of the Company, as defined in Sections
424(f) and 424(g) of the Code; and
(b) Any other corporation with respect to which the Board, upon
recommendation of the Committee, determines that such corporation's
employees shall be eligible to participate herein.
2.12. "Termination of Service" shall mean
(a) In the case of a Participant who was granted an Option in his or her
capacity as an employee of the Company or a Subsidiary, the date on
which he or she ceases to be employed by the Company or any
subsidiary.
(b) In the case of a Participant who was granted an Option in his or her
capacity as a director of the Company or a Subsidiary, the date on
which he or she ceases to serve as a director of the Company or any
Subsidiary.
(c) In the case of a Participant who was granted an Option in his or her
capacity as a consultant to, or distributor of, the Company or a
Subsidiary, the date on which the Committee determines, in its
discretion, that he or she has ceased to render substantial
services, in such capacity, to the Company or any Subsidiary.
3. STOCK TO BE OPTIONED
Subject to the provisions of Section 12 of the Plan, the maximum number of
shares of Stock which may be optioned or sold under the Plan is six
hundred thirty thousand (630,000) shares. Such shares may be treasury, or
authorized, but unissued, shares of Stock of the Company.
4. Administration of the Plan
(a) The Plan shall be administered by the Committee. A majority of the
members of the Committee shall constitute a quorum for the
transaction of business. The Committee shall be responsible to the
Board for the operation of the Plan, and shall make recommendations
to the Board with respect to participation in the Plan by
individuals, and with respect to the extent of that participation.
The interpretation and construction of any provision of the Plan by
the Committee shall be final, unless otherwise determined by the
Board. No member of the Board or the Committee shall be liable for
any action or determination made by him or her in good faith.
(b) The Committee may construe and interpret the Plan and Options
granted thereunder and establish, amend, and revoke rules and
regulations for administration of the Plan. The Committee may
correct any defect or supply any omission, or reconcile any
inconsistency in the Plan, or in any Stock Option Agreement, in the
manner and to the extent it shall deem necessary or expedient to
make the Plan fully effective.
2
<PAGE>
5. ELIGIBILITY
The Board, upon recommendation of the Committee, may grant Options to any
employee, director or distributor of, or consultant to, the Company or any
Subsidiary; provided, however, that in the case of a Subsidiary described
in Section 2.11 (b), Options may be granted only to employees. Options may
be awarded by the Board at any time and from time to time to new
Participants, or to existing Participants, or to a greater or lesser
number of Participants, and may include or exclude previous Participants,
as the Board, upon recommendation by the Committee, shall determine.
Options granted at different times need not contain similar provisions.
6. OPTION PRICE
The Board, upon recommendation of the Committee, shall establish the
purchase price for Stock under each Option. The price shall be equal to or
greater than the greater of (1) eighty percent (80%) of the fair market
value of the Stock (as determined by the Committee) at the time the Option
is granted, or (2) the par value of the Stock.
7. TERMS AND CONDITIONS OF OPTIONS
Each Option granted pursuant to the Plan shall be authorized by the Board
and shall be evidenced by a Stock Option Agreement in such form as the
Board, upon recommendation of the Committee, shall from time to time
approve with respect to that Option. The terms and provisions applicable
to different Options need not be identical. Any Stock Option Agreement
shall, unless the agreement specifically provides otherwise, comply with
and be subject to the following terms and conditions:
(a) Services: The Board may, in its discretion, include a condition that
the Participant shall agree to remain in the employ of, and/or to
continue to render services to, the Company or any Subsidiary for a
period of time (specified in the agreement) following the date on
which the Option is granted. No such agreement shall impose upon the
Company or any Subsidiary any obligation to employ any Participant
for any period of time.
(b) Time and Method of Payment: The Option Price shall be paid in full,
at the time an Option is exercised under the Plan. The price may be
paid either (i) in cash or (ii) by the Participant delivering to the
Company stock certificates, duly endorsed for transfer, for shares
of Stock with a fair market value (as determined by the Committee)
equal to or less than the Option Price, plus cash in an amount equal
to the excess, if any, of the Option Price over the fair market
value of such shares of stock. Otherwise, any purported exercise of
an Option shall be invalid and of no effect. Promptly after the
exercise of an option and payment of the full Option Price, the
Participant shall be entitled to the issuance of a stock certificate
evidencing his or her ownership of the number of shares of Stock
with respect to which the option has been exercised. A Participant
shall have none of the rights of a shareholder until shares are
issued to him or her, and no adjustment will be made for dividends
or other rights for which the record date is prior to the date on
which such certificate is issued.
(c) Number of Shares: Each Stock Option Agreement shall state the total
number of shares of Stock to which it pertains and may also state
the minimum number of shares of Stock to which an Option may be
exercised at any one time.
3
<PAGE>
(d) Option Period and Limitations on Exercise of Options: The Board may,
in its discretion, provide that an Option may not be exercised, in
whole or in part, for any period or periods of time specified in the
Stock Option Agreement. Except as provided in the Stock Option
Agreement, an Option may be exercised, in whole or part, at any time
during its term. No Option may be exercised after the expiration of
fifteen (15) years from the date on which it is granted. No Option
may be exercised for a fractional share of Stock.
(e) Method of Exercise: Any Option granted under the Plan may be
exercised by the Participant by delivering to the Committee on any
business day a written notice specifying the number of shares of
Stock which the Participant then desires to purchase (the "Notice").
8. TERMINATION OF SERVICE
(a) Except as provided in Section 9 below, if a Participant has a
Termination of Service, his or her Options shall terminate
immediately; provided, however, that if a Participant's Termination
of Service is due to his or her retirement, with the consent of the
Company or any such Subsidiary, the Participant may, at any time
within three (3) months after such Termination of Service, exercise
his or her Options to the extent that he or she was entitled to
exercise them on the date of Termination of Service. In no event
shall any Option be exercisable more than fifteen (15) years from
the date on which it was granted.
(b) The Committee may cancel an Option before or during the three (3)
month period referred to in paragraph (a) if the Participant engages
in employment or activities contrary, in the opinion of the
Committee, to the best interests of the Company or Subsidiary. The
Committee shall determine in each case whether a Termination of
Service shall be considered a retirement with the consent of the
Company or a Subsidiary and, subject to applicable law, whether a
leave of absence shall constitute a Termination of Service. Any such
determination of the Committee shall be final and conclusive, unless
affirmitively overruled by the Board.
9. RIGHTS IN EVENT OF DEATH
If a Participant dies before incurring a Termination of Service, or within
twelve (12) months after having retired with the consent of the Company or
any Subsidiary, and without having fully exercised his or her Options, the
executors or administrators of his or her estate (or, if no executor or
administrator has qualified as such, the Participant's distributes under
the applicable state laws of intestate distribution) shall have the right
to exercise such Options, to the extent that such deceased Participant was
entitled to exercise the Options on the date of his or her death. In no
event shall any Option be exercisable hereunder after the earlier of (i)
fifteen (15) years from the date on which it was granted or nine (9)
months from the date of the Participant's death.
10. NO OBLIGATION TO EXERCISE OPTIONS
The grant of an Option shall impose no obligation upon the Participant to
exercise such Option.
4
<PAGE>
11. NONASSIGNABILITY
Options shall not be transferable, other than by will or by the laws of
intestate distribution. During a Participant's lifetime, Options shall be
exercisable only by such participant.
12. EFFECT OF CHANGES IN THE STOCK SUBJECT TO THE PLAN
(a) The aggregate number of shares of Stock available for Options under
the Plan, the number of shares subject to any Option, and the price
per share, shall all be proportionately adjusted for any increase or
decrease in the number of issued shares of Stock subsequent to the
effective date of the Plan (as specified in Section 16) resulting
from (1) a subdivision or consolidation of shares or any other
capital adjustment, (2) the payment of a stock dividend, or (3) any
other increase or decrease on such shares effected without receipt
of consideration by the Company.
(b) If the Company shall be the surviving corporation in any merger or
consolidation, any Option shall pertain, apply, and relate to the
securities to which a holder of the number of shares of Stock
subject to the Option would have been entitled to after the merger
or consolidation.
(c) Upon dissolution or liquidation of the Company, or upon a merger or
consolidation in which the Company is not the surviving corporation,
all Options outstanding under the plan shall terminate; provided,
however, that each Participant (and each other person entitled under
Section 9 to exercise an Option) shall have the right, immediately
prior to such dissolution, liquidation, or consolidation, to
exercise such Participant's Options, in whole or in part, but only
to the extent that such Options are otherwise exercisable under the
terms of the Plan.
(d) Adjustments under this Section 12 shall be determined by the Board,
upon recommendation by the Committee, and such determinations shall
be conclusive. No fractional shares of Stock shall be issued under
the Plan on account of any adjustment specified above.
13. AMENDMENT AND TERMINATION OF THE PLAN
The Board, by resolution, may terminate, amend, or revise the Plan with
respect to any shares as to which Options have not been granted. Neither
the Board nor the Committee may, without the consent of the holder of an
Option, alter or impair any Option previously granted under the Plan,
except as required by law or as specifically authorized herein. Unless
sooner terminated or extended, the Plan shall remain in effect for a
period of fifteen (15) years from the date of the Plan's adoption by the
Board. Termination of the Plan shall not affect any Option previously
granted.
5
<PAGE>
14. REPRESENTATION BY PARTICIPANT
As a condition to the exercise of any portion of an Option, the Company
may require the person exercising such Option to represent and warrant, at
the time of such exercise, that any shares of Stock acquired at exercise
are being acquired only for investment and without any present intention
to sell or distribute such shares if, in the opinion of counsel for the
Company, such a representation is required under the Security Act of 1933
or any other applicable law, regulation, or rule of any governmental
agency.
15. RESERVATION OF SHARES OF STOCK
The Company, during the term of this Plan, will at all times reserve and
keep available, and will seek or obtain from any regulatory body having
jurisdiction any requisite authority necessary to issue and to sell, the
number of shares of Stock that shall be sufficient to satisfy the
requirements of this Plan. The inability of the Company to obtain from any
regulatory body having jurisdiction, the authority deemed necessary by
counsel for the Company, for the lawful issuance and sale of its Stock
hereunder shall relieve the Company of any liability with respect to any
failure to issue or sell Stock as to which the requisite authority has not
been obtained.
16. EFFECTIVE DATE
The Plan shall be effective on and from the later of (a) the date on which
the Plan is approved by resolution of the Board or (b) the date on which
the Plan is approved by the Company's shareholders in accordance with the
requirements of Rule 16b-3 under Section 16 of the Securities Exchange Act
of 1934.
17. GOVERNING LAW
The Plan shall be governed by laws of the State of Delaware (other than
its laws regarding choice of laws), except to the extent that such state
law is preempted by federal law.
6
<PAGE>
MACE SECURITY INTERNATIONAL, INC.
NONQUALIFIED STOCK OPTION PLAN
STOCK OPTION AGREEMENT
1. A STOCK OPTION for a total of ______ shares of Common Stock, par value one
cent ($0.01), of Mace Security International, Inc. a Delaware corporation
("Company") is hereby granted to_________________________ (the
"Optionee"), subject in all respects to the terms and provisions of the
Mace Security International, Inc. Nonqualified Stock Option Plan (the
"Plan"), dated __________, 1993, which has been adopted by the Company and
which is incorporated herein by reference.
2. The option price, as determined by the Board of Directors of the Company,
is _________ dollars ($_________) per share.
3. This Option may not be exercised if the issuance of shares of Common Stock
of the Company upon such exercise would violate any applicable Federal or
State securities or other law or valid regulation. The Optionee, as a
condition to his or her exercise of this Option, shall represent to the
Company that the shares of Common Stock of the Company that he or she
acquires under this Option are being acquired for investment and not with
a present view to distribution or resale, unless counsel for the Company
is then of the opinion that such a representation is not required under
the Securities Act of 1933 or any other applicable law, regulation, or
rule of any governmental agency.
4. This Option may not be transferred in any manner otherwise than by will or
the laws of intestate distribution, and may be exercised only by the
Optionee during the lifetime of the Optionee. The terms of this Option
shall be binding upon the executors, administrators, heirs, successors,
and assigns of the Optionee.
5. This Option may not be exercised more than fifteen (15) years from the
date of its grant, and may be exercised during such term only in
accordance with the terms of the Plan.
Dated: ____________, 1993
MACE SECURITY INTERNATIONAL, INC.
By:
------------------------------
Its duly Authorized Officer
ATTEST:
- -------------------------------------------
<PAGE>
The Optionee acknowledges receipt of a copy of the Plan, which is annexed
hereto, and represents that he or she is familiar with its terms and provisions.
The Optionee hereby accepts this Option subject to all the terms and provisions
of the Plan. The Optionee hereby agrees to accept as binding, conclusive, and
final, all decisions and interpretations of the Board of Directors and, where
applicable, the Stock Option Plan Committee, upon any question arising under the
Plan.
As a condition to the issuance of shares of Common Stock of the Company under
this Option, the Optionee authorizes the Company to withhold, in accordance with
applicable law, from any cash compensation payable to him or her any taxes
required to be withheld by the Company under Federal, State, or local law (i) as
a result of his or her exercise of the Option, or (ii) as a precondition of the
Company's entitlement to an income tax deduction. Alternatively, by prior
agreement with the Company, or if and to the extent that the Participant's cash
compensation is insufficient for the Company to withhold the full amount
required, then the Optionee agrees to remit to the Company, at the time of any
exercise of this Option, the amount of any such taxes required to be withheld by
the Company.
Dated: ____________, 1993
----------------------------------
Optionee
MACE SECURITY INTERNATIONAL, INC.
FORM S-8
EXHIBIT 4.2
<PAGE>
AMENDMENT NO. 1 TO THE
MACE SECURITY INTERNATIONAL, INC. NONQUALIFIED STOCK OPTION PLAN
1. Section 5 of the Mace Security International, Inc. NonQualified Stock Option
Plan shall be amended by deleting the phrase "The Board, upon recommendation of
the Committee, may grant Options to any employee, director or distributor of, or
consultant to, the Company or any Subsidiary; provided, however, that in the
case of a Subsidiary described in Section 2.11 (b), Options may be granted only
to employees." and replacing it with the following:
"The Board, upon recommendation of the committee, may grant Options to any
employee, former employee, director or distributor of, or consultant to,
the Company or any Subsidiary; provided, however, that in the case of a
Subsidiary described in Section 2.11 (b), Options may be granted only to
employees."
2. Section 8 of the Mace Security International, Inc. NonQualified Stock Option
Plan shall be amended by adding the following to the end thereof:
"(c) Notwithstanding paragraph (a), the board, in its discretion, and by
resolution, may include a condition that the option granted the
Participant shall survive Termination of Service."
MACE SECURITY INTERNATIONAL, INC.
FORM S-8
EXHIBIT 5
<PAGE>
[Letterhead of Herzog, Engstrom & Koplovitz, P.C.]
June 6, 1997
Mace Security International, Inc.
160 Benmont Avenue
Bennington, Vermont 05201
RE: Mace Security International, Inc.
Ladies and Gentlemen:
We have acted as counsel for Mace Security International (the "Company"),
in connection with the preparation and filing with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, of a Registration
Statement on Form S-8 (the "Registration Statement") relating to the offering of
up to 630,000 shares of the Company's common stock, $.01 par value ("Common
Stock"), consisting of (a) 160,000 shares of Common Stock issuable pursuant to
the exercise of stock options granted under the Mace Security International,
Inc. Non-qualified Stock Option Plan (the "Plan") held by Control Persons (as
defined in the Registration Statement), and (b) 470,000 shares of Common Stock
issuable, either under options currently issued and outstanding or under options
issuable subsequent to the date hereof, pursuant to the Plan (collectively, the
"Option Shares").
In arriving at the opinions expressed below, we have examined and relied
on the following documents:
(i) the Registration Statement;
(ii) the Plan, as amended as of the date hereof;
(iii) the Certificate of Incorporation of the
Company;
(iv) the By-Laws of the Company, as amended as of the date hereof; and
(v) the records of meetings and consents of the Board of Directors and
stockholders of the Company provided to us by the Company.
In addition, we have examined and relied on the originals or copies certified or
otherwise identified to our satisfaction of all such other records, documents
and instruments of the Company and such other persons, and we have made such
investigations of law, as we have deemed appropriate as a basis for the opinions
expressed below. We have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
the original documents of all documents
<PAGE>
submitted to us as certified or photostatic copies.
We express no opinion other than as to the federal securities laws and the
corporation laws of the State of Delaware.
We have assumed, for the purposes of this opinion, that the Company's
Board of Directors will reserve for issuance pursuant to the Plan 630,000 shares
of Common Stock.
Based on the foregoing, we are of the opinion that:
1. The Company has the corporate power necessary for the issuance of the
Option Shares under the Plan, as contemplated by the Registration Statement. The
Option Shares have been duly authorized and, when issued against payment of the
agreed consideration therefor in accordance with the respective exercise prices
therefor as described in the options relating thereto and the Plan, will be
validly issued, fully paid and non-assessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to us under the heading "Legal Matters" in the
reoffer prospectus forming a part of the Registration Statement.
Very truly yours,
HERZOG, ENGSTROM & KOPLOVITZ, P.C.
/s/ Germaine Curtin
Germaine Curtin
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-8,
(File No. ___________) of our report dated March 25, 1997, except for Note 7 for
which the date is April 14, 1997, on our audits of the financial statements of
Mace Security International, Inc. We also consent to the reference to our firm
under the captions "Experts".
/s/ Coopers & Lybrand L.L.P.
Albany, New York
July 7, 1997
MACE SECURITY INTERNATIONAL, INC.
FORM S-8
EXHIBIT 99.1
<PAGE>
WRITTEN CONSENT TO ACTION
OF THE SHAREHOLDERS
AND
BOARD OF DIRECTORS
in lieu of a Meeting
of
MACE SECURITY INTERNATIONAL, INC.
a Vermont Corporation
THE UNDERSIGNED, being all of the Directors and Shareholders of Mace Security
International, Inc., a Vermont corporation (the "Corporation"), do hereby waive
notice, make the following statements, take the following action and adopt the
following resolutions by unanimous written consent to action without a meeting
pursuant to Vermont Business Corporation Law:
RESOLVED, that a Nonqualified Stock Option Plan in form and substance of that
presented to each of the Board members be, and hereby is, approved and adopted
RESOLVED, that the Corporation's officers are, and each of them is, authorized
to take all acts necessary or appropriate to implement the intent of the
foregoing resolutions.
IN WITNESS WHEREOF, each of the undersigned Directors and Shareholders have
executed this Written Consent to Action of the Shareholders and Board of
Directors in lieu of a meeting as of the date written next to his signature.
This Consent may be executed in one or more counterparts.
/s/ Jon E. Goodrich
September 1, 1993 -----------------------------
Jon E. Goodrich, Shareholder/Director
/s/ Robert P. Gould
September 1, 1993 ------------------------------
Robert P. Gould, Shareholder/Director
/s/ Mark R. Butterfield
September 1, 1993 -------------------------------
Mark R. Butterfield, Director
/s/ Robert D. Norman
September 1, 1993 ------------------------------
Robert D. Norman, Shareholder/Director
/s/ Stuart M. DuBoff
September 1, 1993 ------------------------------
Stuart M. DuBoff, Director
/s/ Robert R. Rosberg
September 1, 1993 ------------------------------
Robert R. Rosberg, Director
MACE SECURITY INTERNATIONAL, INC.
FORM S-8
EXHIBIT 99.2
<PAGE>
APPROVED
5/16/96
MINUTES OF MEETING OF BOARD OF DIRECTORS
OF
MACE SECURITY INTERNATIONAL, INC.
A meeting of the Board of Directors of Mace Security International, Inc.
was held at 10:50 a.m. Thursday, April 18, 1996 at the Best Western Hotel in
Albany, New York.
The following directors were present:
Jon E. Goodrich, Chairman Ralph A. Foote, Esq.
Robert D. Norman, Vice Chairman Robert R. Rosberg
John E. Logan
Robert P. Gould was absent. Dr. Stuart DuBoff was expected but had not yet
arrived.
Also present were Richard A. Galt, Esq., General Counsel and Corporate
Secretary, Brian L. Kelley, interim Corporate Treasurer and Germaine Curtin,
Esq., outside counsel.
The Chairman noted that a quorum was present.
1. Ms. Curtin led a discussion of the potential acquisitions of Howard Uniform
Company, Balco Uniform Cap Corp. and Gould & Goodrich Leather, Inc.
Ms. Curtin noted that while the Chairman, Mr. Gould and Mr. Norman are
free to participate in the discussions, she felt it would be inappropriate for
them to vote on the transactions in light of her conservative reading of the
NASDAQ rules and certain ethical considerations.
2. Rajan Shamdasani, President of Howard and Balco, entered the meeting.
Mr. Shamdasani discussed his background, the history of his companies and
his expectations for the combined entities.
At this point, Dr. DuBoff entered the meeting.
After further discussion, Mr. Shamdasani exited the meeting.
3. On motion by Mr. Norman and seconded by Mr. Logan, it was unanimously
RESOLVED, That the minutes of the meeting of February 23 and 24, 1996 be
accepted.
4. Ms. Curtin led a discussion of the legal, financial and business implications
of the recent actions of John Ahearn, former Vice President of Finance and
Corporate Treasurer.
<PAGE>
On motion by Mr. Norman and seconded by Dr. DuBoff it was unanimously
REOLVED, That the Written Consent To Action of the Board of Directors
terminating Mr. Ahearn be ratified.
On motion by Mr. Norman and seconded by Mr. Rosberg it was unanimously
RESOLVED, That the Written Consent To Action of the Board of Directors
appointing Brian L. Kelley as interim Corporate Treasurer be ratified.
5. On motion by Mr. Foote and seconded by Mr. Logan it was unanimously RESOLVED,
That Mr. Norman's engagement of Wolff Investments, Inc. to issue a fairness
opinion with respect to the acquisitions of Howard Uniform Company, Balco
Uniform Cap Corp. and Gould & Goodrich Leather, Inc. be ratified.
6. Discussion was had of the actions of Gould & Goodrich Leather, Inc. and its
shareholders during the due diligence review period.
On motion by Mr. Foote and seconded by Mr. Rosberg it was unanimously
RESOLVED, That Mr. Norman be authorized to terminate the Letter of Intent with
Gould & Goodrich Leather, Inc. ab initio.
Dr. DuBoff led a discussion of whether Gould & Goodrich Leather, Inc. had
acted in bad faith during the due diligence review period and whether the
company should seek reimbursement from Gould & Goodrich Leather, Inc. of the
legal fees paid to the counsel for Gould & Goodrich Leather, Inc.
The Chairman noted that, as a Board member, and despite the financial
impact on him personally, he recommends that the Board ask for reimbursement of
the additional legal fees from Gould & Goodrich Leather, Inc.
At this point, Ms. Curtin exited the meeting.
7. On motion duly made and seconded it was unanimously RESOLVED, That the
options to purchase shares of the company's common stock granted to each of
Kenneth Butterfield, Mark Butterfield, Esq. and Germaine Curtin, Esq. be
terminated, effective immediately.
On motion duly made and seconded it was unanimously RESOLVED, That the
options to purchase shares of the company's common stock granted to each of
Robert Rosberg, Robert Norman and Dr. Stuart DuBoff be terminated, effective
immediately.
8. On motion duly made and seconded it was unanimously RESOLVED, That the first
sentence of Section 5 of the Mace Security International, Inc. NonQualified
Stock Option Plan be amended to read as follows: The Board, upon recommendation
of the Committee,
2
<PAGE>
may grant Options to any employee, former employee, director or distributor of,
or consultant to, the Company or any Subsidiary; provided, however, that in the
case of a Subsidiary described in Section 2.11 (b). Options may be granted only
to employees.
On motion duly made and seconded it was unanimously RESOLVED, That Section
8 of the Mace Security International, Inc. NonQualified Stock Option Plan be
amended to include a paragraph (c) to read as follows: Notwithstanding paragraph
(a), the Board, in its discretion, and by resolution, may include a condition
that the option granted the Participant shall survive Termination of Service.
9. Discussion was had of the claims made against the company by Mr.
Ahearn. It was noted that Mr. Ahearn's option to purchase shares of the
company's common stock has terminated as a result of the termination of his
employment.
On motion by Mr. Logan and seconded by Mr. Norman it was unanimously
RESOLVED, That Mr. Norman be authorized, at his discretion and after
consultation with counsel, to settle the claims against the company by John
Ahearn, former Vice President of Finance and Corporate Treasurer, for up to
$3,000 cash, nine months of COBRA payments and on option to purchase 10,000
shares of the company's common stock at an exercise price of $1.50 per share.
10. On motion by Mr. Rosberg and seconded by Mr. Norman it was unanimously
RESOLVED, Messrs. Logan and Foote abstaining, That Ralph A. Foote, Esq. and John
E. Logan each be issued an option to purchase 10,000 shares of the company's
common stock at an exercise price of $1.50 per share, effective April 18, 1996,
said options to survive Termination of Service.
On motion by Mr. Norman and seconded by Mr. Logan it was unanimously
RESOLVED, that Richard A. Galt, Esq. be issued an option to purchase 10,000
shares of the company's common stock at an exercise price of $1.50 per share,
effective April 18, 1996, said options to survive Termination of Service.
11. On motion duly made and seconded it was unanimously RESOLVED, That
Kenneth Butterfield, Mark Butterfield, Esq. and Germaine Curtin, Esq., are
deemed to be consultants to the company and shall each be granted an option to
purchase 10,000 shares of the company's common stock at an exercise price of
$1.50 per share, effective April 18, 1996, said options to survive Termination
of Service.
3
<PAGE>
On motion duly made and seconded it was unanimously RESOLVED, That Robert
Rosberg, Robert Norman and Dr. Stuart DuBoff each be granted an option to
purchase 10,000 shares of the company's common stock at an exercise price of
$1.50 per share, effective April 18, 1996, said options to survive Termination
of Service.
12. Mr. Norman presented the Report of the President which included a discussion
of the reductions in operating expenses, the planned movement of operations
within the facility and the rental opportunities those moves will provide. Cost
estimates and timetables for the moves will be presented at the next meeting.
Discussion was had of the results of the first quarter.
In response to a question from Mr. Foote, Mr. Norman reported that Wolff
Investments is investigating Howard Uniform Company's reputation in the
marketplace and with the U.S. government.
13. Mr. Logan presented the Report of the Audit Committee and the
recommendations of Coopers & Lybrand, the company's auditors. At the request of
Mr. Logan, it was agreed that the report from Coopers & Lybrand would be entered
into the minutes of the meeting.
14. At this point, Mr. Norman, Mr. Galt and Mr. Kelley exited the meeting to
allow for a discussion of senior management.
Mr. Norman, Mr. Galt and Mr. Kelley reentered the meeting.
15. The date for the annual shareholder's meeting was set for June 20, 1996 at
10:00 a.m.
The next board meeting was scheduled for May 16, 1996 at 10:30 a.m.,
preferably to be held by telephone.
16. On motion by Mr. Rosberg and seconded by Dr. Duboff it was unanimously
RESOLVED, That the members of the Strategic Planing and Technology Committee
shall be Mr. Norman and the Chairman, with Mr. Logan serving as Committee
Chairman.
17. Further discussion was had of the progress of the potential acquisitions of
Howard Uniform Company, Balco Uniform Cap Corp. and Gould & Goodrich Leather,
Inc.
Mr. Kelley led discussion of his due diligence findings on the acquisition
candidates.
4
<PAGE>
The meeting was adjourned.
/s/ Richard A. Galt
---------------------------
Richard A. Galt, Esq.
Corporate Secretary
