<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
AMENDMENT NO. 1
----------------
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the transition period from ______ to ______
Commission File number 0-22810
-------
MACE SECURITY INTERNATIONAL, INC.
- -------------------------------------------------------------------------------
(Name of Small Business Issuer in Its Charter)
Delaware 03-0311630
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1000 Crawford Place, Suite 400
------------------------------
Mt. Laurel, New Jersey
---------------------- 08054
(Address of Principal -----
Executive Offices) (Zip Code)
(856) 778-2300
--------------
(Issuer's Telephone Number,
Including Area Code)
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act:
Title of Class: Common Stock, par value $.01 per share
---------------
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
-----
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
The Registrant's net sales for 1999 from continuing operations were $28,681,009.
As of March 23, 2000, the aggregate market value of the Registrant's common
stock held by non-affiliates of the Registrant, based on the closing sale price
of $4.9375 on March 23, 2000, was approximately $83,831,146. As of March 23,
2000, the Registrant had 23,582,563 shares of common stock outstanding.
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<PAGE>
INDEX TO FORM 10-KSB/A - PART III
Page
----
PART III
Item 9. Directors, Executive Officers, Promoters 1
and Control Persons, Compliance with
Section 16(a) of the Exchange Act
Item 10. Executive Compensation 3
Item 11. Security Ownership of Certain Beneficial 6
Owners and Management
Item 12. Certain Relationships and Related 8
Transactions
<PAGE>
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16A of the Exchange Act.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Louis D. Paolino, Jr......... 43 Director, Chairman of the Board, President, and Chief
Executive Officer
Gregory M. Krzemien.......... 40 Chief Financial Officer and Treasurer
Robert M. Kramer............. 47 Director, General Counsel, Executive Vice President and
Secretary
Michael G. Fazio............. 50 Vice president - Operations
Matthew J. Paolino........... 35 Director and Vice President
Mark S. Alsentzer............ 45 Director
Jon E. Goodrich.............. 54 Director and Vice President of Security Products Division
Richard B. Muir.............. 44 Director
Constantine N. Papadakis..... 54 Director
</TABLE>
All of Mace's directors serve for terms of one year each until their
successors are elected and qualified.
LOUIS D. PAOLINO, JR. serves as the Chairman of the Board, President and
Chief Executive Officer of Mace. Mr. Paolino has been a director of Mace
since May 24, 1999. From June 1996 through December 1998, Mr. Paolino served as
Chairman of the Board, President and Chief Executive Officer of Eastern
Environmental Services, Inc. Prior thereto, he was President of Soil Remediation
of Philadelphia, Inc., a company engaged in the business of treating
contaminated soil which was sold to USA Waste Services, Inc., a waste management
corporation, in September 1993. From September 1993 to June 1996, Mr. Paolino
served as a Vice President of USA Waste Services, Inc. From November 1995 to
January 1996, Mr. Paolino served on the Board of Directors of Metal Management,
Inc., formerly known as General Parametrics Corp., a publicly traded company.
From February 1999 until March 2000, Mr. Paolino served on the Board of
Directors of U.S. Plastic Lumber Corporation, a publicly traded company. Mr.
Paolino received a B.S. in Civil Engineering from Drexel University. Mr. Paolino
is 43 years old.
GREGORY M. KRZEMIEN serves as the Chief Financial Officer and Treasurer of
Mace. From August 1992 through December 1998, he served as Chief Financial
Officer and Treasurer of Eastern Environmental Services, Inc. From October 1988
to August 1992, Mr. Krzemien was a senior audit manager with Ernst & Young LLP,
and he held other positions with that firm since 1981. Mr. Krzemien received a
B.S. degree in Accounting from Pennsylvania State University and is a certified
public accountant. Mr. Krzemien is 40 years old.
ROBERT M. KRAMER serves as a director of Mace, and as the General
Counsel, Secretary and Executive Vice President of Mace. Mr. Kramer has
been a director of
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Mace since July 1, 1999. From June 1996 through December 1998, he served as
General Counsel, Executive Vice President and Secretary of Eastern Environmental
Services, Inc. Mr. Kramer is an attorney and has practiced law since 1979 with
various firms, including Blank Rome Comisky & McCauley, Philadelphia,
Pennsylvania and Arent Fox Kitner Poltkin & Kahn, Washington, D.C. Since 1989,
Mr. Kramer has been the sole partner of Robert M. Kramer & Associates, P.C., a
law firm consisting of three lawyers. Although Mr. Kramer will continue his
private practice of law at Robert M. Kramer & Associates, P.C., he will devote a
substantial amount of time to performing his duties for Mace. From December 1989
to December 1997, Mr. Kramer served on the Board of Directors of American
Capital Corporation, a registered securities broker dealer. Mr. Kramer received
a J.D. degree from Temple University School of Law. Mr. Kramer is 47 years old.
MICHAEL G. FAZIO serves as Vice President - Operations of Mace. Mr. Fazio
has over 25 years of experience in the car care industry. Since 1972, Mr. Fazio
has built and managed twelve car washes which included gas stations, convenience
stores and quick oil changes. In 1997, Mr. Fazio sold his business to become
President and Chief Operating Officer of Wash Depot. Under Mr. Fazio's
leadership, Wash Depot grew to $100 million in sales and over 6,000 employees.
Mr. Fazio is highly regarded in the car care industry and is often asked to
speak at seminars within the car wash community. Mr. Fazio is 50 years old.
MATTHEW J. PAOLINO serves as a director and as a Vice President of Mace.
Mr. Paolino has been a director of Mace since July 1, 1999. From 1996 to
December 1998, Mr. Paolino served as a director of Eastern Environmental
Services, Inc. as well as Vice President of Risk Management, Asset Management
and Special Waste Divisions of Eastern Environmental Services, Inc. From 1993 to
1996, Mr. Paolino served as Vice President and General Manager - Soil
Remediation Division of USA Waste Services, Inc., which was acquired by Eastern
in August 1997. Mr. Paolino received a B.S. degree in Civil Engineering from
Villanova University in 1986 and a J.D. degree from the Widener School of Law in
1994. Mr. Paolino is the brother of Louis D. Paolino, Jr., the Chairman,
President and Chief Executive Officer of Mace. Mr. Paolino is 35 years old.
MARK S. ALSENTZER serves as a director of Mace. Mr. Alsentzer has been a
director of Mace since December 15, 1999. From December 1996 through the
present, Mr. Alsentzer has been President and Chief Executive Officer of U.S.
Plastic Lumber Corporation (a plastic and lumber and recycling company). From
1992 to December 1996, Mr. Alsentzer served as Vice President of Republic
Environmental Systems, Inc. (an environmental services company). Mr. Alsentzer
also serves as Director, and since January 4, 2000, as Chairman of the Board, of
U.S. Plastic Lumber Corporation. Mr. Alsentzer is 45 years old.
JON E. GOODRICH serves as a director of Mace and Vice President of the
Security Product Division of Mace. Mr. Goodrich has been a director of Mace
since November, 1993. From June 1987 through June 1995 and from January 1996
through March 1997, Mr. Goodrich was the Chairman of the Board of Mace. From
June 1987 through January 1996 and from March 1997 through May 1999, Mr.
Goodrich was President and Chief Executive Officer of Mace. From November 1985
through January 1997, Mr. Goodrich was Vice President of Gould & Goodrich
Leather, Inc. (a leather products manufacturer). From November 1985 through
January 1997, Mr. Goodrich was President of G&G Realty, Inc. (a real estate
management company). Mr. Goodrich is 54 years old.
RICHARD B. MUIR serves as a director of Mace. Mr. Muir has been a director
of Mace since December 15, 1999. From 1998 through the present, Mr. Muir has
been Executive Vice President and Secretary of Excel Legacy Corp. (a real estate
development company). From 1989 through May 1999, Mr. Muir was Executive Vice
President and Secretary of New Plan Excel Realty Trust, Inc. (a
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real estate development company). Mr. Muir also serves as a director of Excel
Legacy Corporation and Warner Beck, Inc. (a securities broker/dealer firm). Mr.
Muir is 44 years old.
CONSTANTINE N. PAPADAKIS services as a director of Mace. Mr. Papadakis has
been a director since May 24, 1999. From 1995 through the present Mr. Papadakis
has been President of Drexel University. From 1986 through 1995, Mr. Papadakis
was Dean of the College of Engineering, Geier Professor of Engineering Education
and Professor of Civil Engineering at the University of Cincinnati. Mr.
Papadakis also serves on the board of directors of Fidelity Financial of Ohio
and the Philadelphia Stock Exchange. Mr. Papadakis is 54 years.
Section 16(a) Beneficial Ownership Reporting Compliance.
Section 16(a) of the Exchange Act requires Mace's directors and executive
officers, as well as persons beneficially owning more than 10% of Mace's
outstanding shares of common stock and certain other holders of such shares
(collectively, "Covered Persons"), to file with the Commission and the NASDAQ
Stock Market (the "NASDAQ"), within specified time periods, initial reports of
ownership, and subsequent reports of changes in ownership, of common stock and
other equity securities of Mace.
Based upon Mace's review of copies of such reports furnished to it and upon
representations of Covered Persons that no other reports were required, to
Mace's knowledge, all of the Section 16(a) filings required to be made by the
Covered Persons with respect to 1999 were made on a timely basis except that
Forms 4 relating to Mace stock activity in December 1999 for Mark Alsentzer,
Matthew Paolino, Robert Kramer, Louis D. Paolino, Jr., and Jon E. Goodrich were
filed on January 20, 2000 rather than January 10, 2000.
Item 10. Executive Compensation.
The following table provides summary information concerning cash and
certain other compensation paid or accrued by Mace to or on behalf of Mace's
Chief Executive Officer and each of the other most highly compensated executive
officers of Mace whose compensation exceeded $100,000 (the "Named Executive
Officers") for the three years ended December 31, 1999, 1998 and 1997.
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SUMMARY COMPENSATION TABLE(1)
- ----------------------------------------------------------------------------
ANNUAL COMPENSATION
NAME AND
PRINCIPAL YEAR SALARY BONUS OTHER ANNUAL
POSITIONS COMPENSATION
- ----------------------------------------------------------------------------
Louis D. Paolino, Jr., 1999 $201,565 -- --
President, Chief 1998 -- -- --
Executive Officer and 1997 -- -- --
Chairman of the Board(2)
Jon E. Goodrich, 1999 $ 93,750 -- --
President and Chief 1998 123,714 -- --
Executive Officer(3) 1997 125,214 -- --
- ----------------------------------------------------------------------------
(1) No bonuses were paid, no long-term compensation awards were made, and no
other compensation was paid during 1999 to Mr. Paolino or any other
executive officer of Mace. Robert M. Kramer, Mace's Executive Vice
President and General Counsel, is paid at an annual rate of $125,000,
Gregory M. Krzemien, Mace's Chief Financial Officer, is paid at an annual
rate of $110,000, and Michael Fazio, Mace's Vice President - Operations, is
paid at an annual rate of $100,000. Because these persons were not employed
by Mace for the entire year, their annual compensation for the year ended
December 31, 1999 was less than $100,000 each. Mr. Paolino was the only
officer to receive compensation in excess of $100,000 in 1999. Mr. Paolino
and Mr. Goodrich have never been granted options by Mace as compensation.
Thus, tables disclosing information with respect to options granted in 1999
to the named current and former executive officers of Mace and information
with respect to the year-end value of options held by the named current and
former executive officers of Mace have been excluded.
(2) Mr. Paolino has served as President, Chief Executive Officer and Chairman
of the Board since July 1, 1999.
(3) Mr. Goodrich served as President and Chief Executive Officer until July 1,
1999.
Director Compensation
During 1998 and through July 1, 1999, directors who were not employees of
Mace received fees of $500 per Board or Committee meeting attended. Such
directors also were entitled to receive reasonable travel and out of pocket
expenses relating to their attendance at such meetings. Commencing on July 1,
1999, Mace ceased paying fees to directors, but will continue to pay non-
employee directors reasonable travel and out-of-pocket expenses relating to
their attendance at meetings.
Mace granted options to purchase 20,000 shares of Mace common stock at
$11.00 per share to Constantine Papadakis in connection with his appointment to
the Board of Directors on May 24, 1999 and additional options to purchase 20,000
shares of Mace common stock at $8.50 per share on September 1, 1999. Mace
granted options to purchase 200,000 shares, 125,000 shares and 125,000 shares of
Mace common stock at $2.6875 per share, respectively, to Robert Kramer, Matthew
Paolino and Rodney Proto (a former director) on March 26, 1999 in connection
with the change of control transactions (see Item 12. Certain Relationships and
Related Transactions - Acquisition of Control of Mace.)
Option/SAR and Warrant Grants in Last Fiscal Year
No options, warrants or stock appreciation rights (SAR's) were granted as
compensation to any executive officer included in the summary compensation table
during the fiscal year ended December 31, 1999 and no such securities were
exercised by any such officer. During that year, however, Robert M. Kramer,
Mace's Executive Vice
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President and General Counsel, received grants of options to purchase 200,000
shares of Mace common stock, Gregory M. Kzemien, Mace's Chief Financial Officer
and Treasurer received grants of options to purchase 125,000 shares of Mace
common stock and Michael Fazio, Mace's Vice President - Operations, received
grants of options to purchase 125,000 shares of Mace common stock. Additionally,
on December 27, 1999 Robert Kramer was granted reload options to purchase 37,209
shares of Mace common stock at $5.50 per share and on December 29, 1999, Matthew
Paolino was granted reload options to purchase 37,209 shares of Mace common
stock at $5.50 per share. The shares issuable upon the exercise of these options
(to the extent that they are exercisable within 60 days of March 23, 2000) are
reflected in the table included under the caption "Security Ownership of Certain
Beneficial Owners and Management." In connection with the merger of American
Wash Services, Inc. on July 1, 1999 (see Item 12. Certain Relationships and
Related Transactions - AWS Transaction), Mr. Paolino received warrants to
purchase 1,500,000 shares of Mace common stock. Mace does not consider these
warrants to be compensation for Mr. Paolino's services under his employment
agreement or otherwise.
Aggregated Options/SAR and Warrant Exercises in Last Fiscal Year
No options or warrants were received as compensation by executive officers
of Mace included in the Summary Compensation Table during the fiscal year ended
December 31, 1999. However, Louis D. Paolino, Jr. exercised 363,636 warrants
(received in connnection with the change of control transactions described in
Item 12) at an exercise price of $1.375 per share in December 1999 and Robert
Kramer exercised options to purchase 37,209 shares of Mace common stock at an
exercise price of $2.6875 per share in December 1999.
Employment Agreements
Louis Paolino, Jr. Employment Agreement
Mace currently employs Louis Paolino, Jr. as its President and Chief
Executive Officer under a four-year employment agreement. The principal terms of
the employment agreement include: annual salary of $350,000; provision of
certain medical and other employee benefits; prohibition against competing with
Mace during employment and for a three month period following a termination of
employment; and a $7,000,000 payment in the event that Mr. Paolino's employment
is terminated for any reason, except for death and disability. Mace has not
granted options to purchase Mace common stock to Louis Paolino, Jr. as
compensation for his services to Mace, under his employment agreement or
otherwise. Mr. Paolino, however, holds warrants to acquire 1,500,000 shares of
Mace common stock that he acquired in connection with the change of control
transactions described in item 12.
Jon Goodrich Employment Agreement
During 1998, Mace employed Jon Goodrich as its President and Chief
Executive Officer under an employment agreement that expired on September 1,
1999. Jon Goodrich now serves as Mace's Vice President for its Security Products
Division. The principal terms of the employment agreement include: annual salary
of $125,000; prohibition against accepting employment with any other entity;
prohibition against competing with Mace during employment and for a two year
period following his voluntary termination of employment with Mace or
termination of his employment by Mace for cause; and entitlement to all contract
payments for the entire contract term upon termination of his employment without
cause.
Michael Fazio Employment Agreement
Mace currently employs Michael Fazio as its Vice President of Operations
under the terms of a three-year employment agreement. Such agreement provides
for an annual salary of $100,000, certain
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medical and other employee benefits, the granting of options to purchase 125,000
shares of Mace common stock at $6.875 per share that vest over a period of three
years (except in the event of a change of control, in which case such options
vest immediately) and a prohibition against competing with Mace during
employment and for a six month period following a termination of employment. In
addition, in the event that Mace terminates Mr. Fazio's employment without
cause, Mr. Fazio has the right to receive a lump-sum payment equal to six months
salary.
Other Executive Employment Agreements
Mace currently employs Robert M. Kramer and Gregory M. Krzemien under four-
year employment agreements. Each employment agreement provides for annual
salary, certain medical and other employee benefits, and a prohibition against
competing with Mace during employment and for a three month period following a
termination of employment. In addition, Mace granted to each of these executive
officers options to purchase shares of Mace common stock at $2.6875 per share
that vest over a period of four years, except in the event of a change of
control, in which case such options vest immediately. The table below discloses
the salary and option grants for these executive officers.
Name Office Annual Salary Options
- ---- ------ ------------- -------
Robert M. Kramer Executive Vice President $125,000 200,000
and General Counsel
Gregory M. Krzemien Chief Financial Officer 110,000 125,000
and Treasurer
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following beneficial ownership table sets forth information as of March
23, 2000 regarding beneficial ownership of shares of Mace common stock by the
following persons:
o each person who is known to Mace to own beneficially more than 5% of
the outstanding shares of Mace common stock, based upon Mace's records
or the records of the Securities and Exchange Commission;
o each director of Mace; and
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o all directors and executive officers of Mace as a group.
Unless otherwise indicated, to our knowledge, all persons listed on the
beneficial ownership table below have sole voting and investment power with
respect to their shares of Mace common stock. Shares of Mace common stock
subject to options or warrants exercisable within 60 days of March 23, 2000 are
deemed outstanding for the purpose of computing the percentage ownership of the
person holding such options or warrants, but are not deemed outstanding for
computing the percentage ownership of any other person.
<TABLE>
<CAPTION>
Name Shares Beneficially Owned Percent(1)
---- ------------------------- ----------
<S> <C> <C>
Louis D. Paolino, Jr................... 6,599,448(2)(3) 26.7%
1000 Crawford Place, Suite 400
Mt. Laurel, NJ 08054
Excel Legacy Corporation............... 3,812,500(4) 16.1
16955 Via Del Campo
San Diego, CA 92127
Mark S. Alsentzer...................... 1,100,000(5) 4.7
2300 Glades Road, Suite 440W
Boca Raton, FL 33431
Red Mountain Holdings, Ltd............. 768,360(3)(6) 3.3
Arack Chambers
Smith Hughes McKinsy
Road Town, Tortola, B.V.I.
Jon E. Goodrich........................ 910,546(7) 3.9
160 Benmont Ave.
Bennington, VT 05201
Matthew J. Paolino..................... 408,840(8) 1.7
Robert M. Kramer....................... 414,649(3)(9) 1.6
Constantine N. Papadakis............... 40,000(10) *
Richard B. Muir........................ -- --
All current directors and executive 9,714,964(11) 38.7
officers as a group (9 persons)......
</TABLE>
- ----------
* Less than 1% of the outstanding shares of Mace common stock.
(1) Percentage calculation is based on 23,582,563 shares outstanding on March
23, 2000.
(2) Includes (i) warrants to acquire 1,136,364 shares and (ii) 1,153,412 shares
for which Louis Paolino, Jr. has been granted irrevocable proxies to vote
such shares. See "Irrevocable Proxies Granted to Louis D. Paolino, Jr."
below.
(3) Louis Paolino, Jr., Red Mountain Holdings, Ltd. and Robert Kramer filed a
Statement on Schedule 13D (initially filed on May 28, 1999; as amended on
July 15, 1999) reporting the acquisition of the shares of Mace common stock
reported in the table above. Under Rule 13d-5(b)(1) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), such
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stockholders may be considered a "group" acting together to control Mace
and therefore may each be deemed to beneficially own the shares of Mace
common stock held by all of such stockholders, 8,030,410 shares in the
aggregate. Each such stockholder, however, expressly disclaims his or its
membership in a group and the beneficial ownership of the shares acquired
by the other stockholders. As required by Rule 13d-3(d)(1)(i)(D) of the
Exchange Act, the table discloses as beneficially held by Louis Paolino,
Jr. and Robert Kramer shares of Mace common stock subject to certain
options and warrants that are not exercisable within 60 days of March 23,
2000.
(4) Includes (i) 3,500,000 shares and (ii) warrants to purchase 62,500 shares,
all held by Millennia Car Wash LLC, a limited liability company controlled
by Excel Legacy Corporation.
(5) Includes warrants to purchase 50,000 shares.
(6) David Ehrlich, a consultant for Mace, in his position as the sole director
of Red Mountain Holdings, Ltd. may be deemed to have the sole power to
direct the voting and disposition of these shares and may therefore be
deemed the beneficial owner thereof.
(7) Includes 22,300 shares held by Jon Goodrich's wife. Jon Goodrich disclaims
beneficial ownership of the shares owned by his wife.
(8) Includes options to purchase 14,631 shares.
(9) Includes (i) warrants to acquire 75,000 shares and (ii) options to purchase
200,000 shares.
(10) Represents options to purchase 40,000 shares.
(11) See Notes 2, 3, 7, 8, 9, and 10 above. Also includes (i) 152,940 shares
and (ii) options to purchase 88,541 shares held by two executive officers
or directors who are not listed in the table.
Irrevocable Proxies Granted to Louis D. Paolino, Jr.
In connection with Mace's recent acquisition of certain car wash
businesses, the following stockholders have granted to Louis Paolino, Jr.
irrevocable proxies for the sole power to vote, but not to dispose of, the
1,153,412 aggregate shares of Mace common stock issued to such individuals as
consideration for such acquisitions until the expiration date of such proxies:
Expiration date
Stockholder Shares of Proxies
---------------------- --------- ---------------
Rosario Higgins 168,883 5-18-00
Gary Higgins 984,529 5-18-00
---------
Total: 1,153,412
Item 12. Certain Relationships and Related Transactions.
Acquisition of Control of Mace
On July 1, 1999, Louis D. Paolino, Jr., Mace's Chairman, President and
Chief Executive Officer, along with certain of his affiliates, acquired a
majority of the outstanding shares of Mace common stock and thus acquired
control of Mace.
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This acquisition of control involved a series of transactions approved by
the former Board of Directors of Mace and a majority of Mace's stockholders. The
consummation of this series of transactions changed the principal business of
Mace from the sale of personal security products to the operation and
consolidation of car wash facilities. On June 8, 1999 Mace distributed an
information statement to its stockholders describing, among other things, this
series of transactions.
The first transaction involved the purchase from Mace of an aggregate of
3,735,000 unregistered shares of Mace common stock for $1.375 per share;
1,910,000 shares by Louis Paolino, Jr. and an aggregate of 1,825,000 shares by
certain members of his management team and certain other individuals designated
by Mr. Paolino. These purchases were made pursuant to a Stock Purchase Agreement
dated March 26, 1999 (as amended) between Mace and Mr. Paolino. Additional
related purchases were also made on July 1, 1999 pursuant to this Stock Purchase
Agreement:
o Louis Paolino, Jr. purchased 1,000,000 shares of Mace common stock
directly from Mr. Goodrich for $1.375 per share and 100,000 shares of
Mace common stock directly from each of two other stockholders of Mace
for $1.375 per share;
o Robert M. Kramer purchased 50,000 shares of Mace common stock directly
from Mr. Goodrich for $1.375 per share; and
o Ten individuals designated by Louis Paolino, Jr. purchased from Mace
an aggregate of 1,850,000 shares of Mace common stock for $2.00 per
share.
AWS Transaction
The second transaction involved the merger of American Wash Services, Inc.,
a car wash facility company controlled by Louis Paolino, Jr. with and into a
wholly-owned subsidiary of Mace pursuant to a merger agreement entered into
March 26, 1999. The Merger was completed on July 1, 1999. Louis Paolino, Jr. and
Red Mountain Holdings, Ltd., American Wash's other shareholder, received in
exchange for all of the shares of American Wash, $4,687,500, in cash, and
628,362 unregistered shares of Mace common stock, of which Louis Paolino, Jr.
received 470,000 shares and Red Mountain received 158,362 shares. Louis Paolino,
Jr. and Robert Kramer received the following additional consideration in
connection with this Merger:
o Louis Paolino, Jr. received a warrant to purchase 1,500,000 shares of
Mace common stock at a purchase price of $1.375 per share;
o Louis Paolino, Jr. received a warrant to purchase 250,000 shares of
Mace common stock at a purchase price of $2.50 per share (which has
subsequently been assigned to a third party); and
o Robert Kramer received a warrant to purchase 75,000 shares of Mace
common stock at a purchase price of $1.375 per share.
Mace's Board of Directors and management team were restructured in
connection with these transactions. Louis Paolino, Jr. was appointed as Mace's
Chairman, President and Chief Executive Officer. The entire Board of Directors,
other than Mr. Goodrich, resigned and were replaced and the Board
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appointed Mr. Kramer as Mace's Secretary, Executive Vice President and General
Counsel and Mr. Krzemien as Mace's Chief Financial Officer and Treasurer.
Related Party Transactions
In August 1999, Mace entered into a month-to-month lease with Bluepointe,
Inc., a corporation controlled by Louis Paolino, Jr., Mace's Chairman, President
and Chief Executive Officer, for Mace's executive offices in Mt. Laurel, New
Jersey. The lease provides for monthly rental payments of $10,000. Mace believes
that the terms of this lease are competitive when compared to similar facilities
in the Mt. Laurel, New Jersey area.
Robert M. Kramer, Mace's General Counsel, Executive Vice President and
Secretary, is engaged in the practice of law through Robert M. Kramer &
Associates, P.C., a professional corporation owned by Mr. Kramer, which has
rendered legal services to Mace since April 1999. Mace paid such corporation
approximately $165,000 during fiscal year ended December 31, 1999, and 65,000
through March 31, 2000. Mace does not anticipate paying such corporation greater
than $200,000 for the remainder of this fiscal year.
During fiscal year 1999, Mace paid approximately $391,000 for car wash
parts, equipment and related services to Sonny's Enterprises, Inc., a car wash
parts and equipment company owned by Paul G. Fazio, the brother of Michael
Fazio, Mace's Vice President of Operations. Mace contracted with Sonny's
Enterprises based on the quality of parts, equipment and services offered by
Sonny's Enterprises and the competitive prices that Sonny's Enterprises offered
for such parts, equipment and services.
During fiscal year 1999, Mace paid $50,000 for charter airline services to
Air Eastern, a charter airline company owned by Louis D. Paolino, Jr., Mace's
Chairman of the Board, Chief Executive Officer and President. Mace believes that
the rates charged are competitive when compared with similar services provided
by independent airline charter companies.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MACE SECURITY INTERNATIONAL, INC.
By: /s/ Gregory M. Krzemien
------------------------------
Name: Gregory M. Krzemien
Title: Chief Financial Officer
and Treasurer
Date: May 1, 2000
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