SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TOTAL CONTAINMENT, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/_/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(1)(3).
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
/X/ No Fee Required.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/_/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
1) Amount previously paid: _________________________________________________
2) Form, Schedule or Registration No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
<PAGE>
[LOGO]
March 30, 2000
Dear Shareholder:
Total Containment, Inc.'s Annual Meeting of Shareholders will be held on
Tuesday, May 2, 2000, at 2:00 p.m., Eastern Time at the Company's offices
located at 422 Business Center, A130 North Drive, Oaks, Pennsylvania 19456.
The matters to be acted on at the Annual Meeting are: (a) the election of
three Class III directors, and (b) the ratification of the appointment by the
Board of Directors of Total Containment, Inc. of Grant Thornton LLP as its
independent auditors for the year 2000. These matters are described in the
enclosed Notice of Annual Meeting of Shareholders and Proxy Statement.
Thank you for your interest in TCI. I look forward to seeing you at the
Annual Meeting.
Sincerely,
/s/ Pierre Desjardins
----------------------
Pierre Desjardins,
Chairman of the Board
PLEASE SIGN AND DATE YOUR PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE AS
SOON AS POSSIBLE.
<PAGE>
[LOGO]
422 Business Center
A130 North Drive
P.O. Box 939
Oaks, Pennsylvania 19456
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 2, 2000
----------------------------------------
To the Shareholders of Total Containment, Inc.:
Notice is hereby given that the Annual Meeting (the "Annual Meeting") of
the holders of common stock, $0.01 par value (the "Common Stock"), of Total
Containment, Inc. (the "Company") will be held at the Company's offices located
at 422 Business Center, A130 North Drive, Oaks, Pennsylvania 19456 on Tuesday,
May 2, 2000, at 2:00 p.m., Eastern Time. Matters to be considered are as
follows:
1. To elect three Class III directors to hold office until the 2003
Annual Meeting of Shareholders and until their successors shall have been
elected and qualified (Matter No. 1);
2. To ratify the appointment by the Company's Board of Directors of
Grant Thornton LLP as the Company's independent auditors for the fiscal
year ending December 31, 2000 (Matter No. 2); and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
Holders of record of issued and outstanding shares of Common Stock at the
close of business on February 25, 2000, are entitled to notice of, and to vote
at, the Annual Meeting. Such shareholders may vote in person or by proxy. The
stock transfer books of the Company will not be closed.
The Board of Directors of the Company cordially invites you to attend the
Annual Meeting. Whether or not you are personally present, your shares should be
represented at the Annual Meeting. Accordingly, please sign and return your
proxy in the enclosed envelope.
By Order of the Board of Directors,
/s/ Richard H. Gross
---------------------------
Richard H. Gross, Secretary
Dated: March 30, 2000
Oaks, Pennsylvania
SHAREHOLDERS ARE URGED TO SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY
IN THE ACCOMPANYING ENVELOPE. THE PROXY IS REVOCABLE AT ANY TIME BY A WRITTEN
INSTRUMENT, INCLUDING A LATER DATED PROXY, SIGNED IN THE SAME MANNER AS THE
PROXY AND RECEIVED BY THE SECRETARY OF THE COMPANY AT OR BEFORE THE ANNUAL
MEETING. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY, IF YOU WISH, REVOKE YOUR
PROXY BY VOTING IN PERSON.
<PAGE>
TOTAL CONTAINMENT, INC.
422 Business Center
A130 North Drive
P.O. Box 939
Oaks, Pennsylvania 19456
------------------
PROXY STATEMENT
FOR ANNUAL MEETING
------------------
GENERAL
INTRODUCTION
Total Containment, Inc. (the "Company") is a Pennsylvania business
corporation headquartered at 422 Business Center, A130 North Drive, Oaks,
Pennsylvania 19456.
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of the Company to be used at the Annual
Meeting (the "Annual Meeting") of holders of Common Stock, $0.01 par value (the
"Common Stock"), of the Company to be held at the Company's offices located at
422 Business Center, A130 North Drive, Oaks, Pennsylvania 19456 on Tuesday, May
2, 2000, at 2:00 p.m., Eastern Time, and at any adjournment or adjournments
thereof. The approximate date upon which this Proxy Statement and the
accompanying proxy were first sent, given or otherwise made available to
shareholders was March 30, 2000. In addition to the use of the mails, proxies
may be solicited by personal interview and telephone by directors, officers and
employees of the Company and its subsidiaries. The Company will pay all costs of
soliciting proxies.
VOTING SECURITIES
Holders of record of the Common Stock at the close of business on February
25, 2000 (the "Record Date") are entitled to notice of, and to vote at, the
Annual Meeting.
At the Annual Meeting, each shareholder is entitled to one vote for each
share of the Common Stock registered in the shareholder's name as of the Record
Date. On the Record Date, there were 4,672,600 shares of the Common Stock
outstanding and, accordingly, holders of the Common Stock are entitled to cast a
total of 4,672,600 votes at the Annual Meeting. Holders of the Common Stock are
not entitled to cumulate votes for the election of directors.
Of the 4,672,600 shares of Common Stock outstanding, 2,649,000 shares,
representing 56.69% of the issued and outstanding shares of Common Stock, are
indirectly, beneficially owned by Mr. Marcel Dutil, director of the Company. Mr.
Dutil has informed the Board that he intends to cause all of the 2,649,000
shares of Common Stock of the Company to be voted "FOR" the election of the
nominees of the Board of Directors of the Company ("Matter No. 1") and "FOR" the
ratification of the appointment of Grant Thornton LLP as the Company's
independent auditors for 2000 ("Matter No. 2").
If the enclosed form of proxy is appropriately marked, signed and returned
in time to be voted at the Annual Meeting, the shares represented by the proxy
will be voted in accordance with the instructions marked thereon. Signed proxies
not marked to the contrary will be voted "FOR" Matter No. 1 and "FOR" Matter No.
2. Signed proxies will be voted "FOR" or "AGAINST" each other matter which
properly comes before the Annual Meeting or any adjournment or adjournments
thereof, at the discretion of the persons named as proxyholders as provided in
the rules of the Securities and Exchange Commission, including with respect to
any matter of which the Company did not receive notice by February 8, 2000.
With respect to the election of directors (Matter No. 1), each shareholder
may cast such holder's votes "FOR" all the nominees or may "WITHHOLD AUTHORITY"
to vote for all or for any individual
1
<PAGE>
nominee. Votes which are withheld will not be counted for purposes of the
election of directors, but will be counted as present for purposes of
determining the existence of a quorum.
With respect to the ratification of the appointment of auditors (Matter No.
2), each shareholder may cast all of such holder's votes "FOR" or "AGAINST" such
proposal, or may "ABSTAIN" from voting. Abstentions will be counted as present
for purposes of determining the existence of a quorum. However, because the
ratification of auditors requires the affirmative vote of a majority of shares
present, in person or by proxy, and entitled to vote, abstentions will have the
effect of a negative vote.
Under applicable Pennsylvania law, broker non-votes will be counted as
present for purposes of determining whether a quorum exists at the Annual
Meeting, but a broker non-vote with respect to Matters No. 1 or 2 will not be
counted as present for purposes of such Matters and, as a result, will have no
effect on the outcome of such Matters.
RIGHT OF REVOCATION
Any shareholder giving a proxy has the power to revoke it by a written
instrument, including a later dated proxy, signed in the same manner as the
proxy and received by the Secretary of the Company prior to its exercise. Any
shareholder attending the Annual Meeting may also revoke his proxy by voting in
person at the Annual Meeting.
QUORUM
Under the Company's Bylaws, holders of a majority of the shares entitled to
vote at the Annual Meeting must be present, in person or by proxy, to constitute
a quorum for the transaction of business at the Annual Meeting. Marcel Dutil, a
director of the Company, has informed the Board that the 2,649,000 shares of
Common Stock he indirectly, beneficially owns will be present, in person or by
proxy, at the Annual Meeting so that a quorum will be present.
PRINCIPAL SHAREHOLDERS
The following table sets forth information, as of the Record Date, as to
beneficial owners, either directly or indirectly, of 5% or more of the
outstanding shares of the Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------------------------ ----------------- --------
<S> <C> <C>
Marcel Dutil(1)............................................. 2,649,000(2)(3) 56.69%
270 Chemin du Tremblay
Boucherville, Quebec
J43 5X9
</TABLE>
- ------------------
(1) Marcel Dutil is a director of the Company.
(2) These shares are indirectly, beneficially owned by Mr. Dutil. Mr. Dutil
possesses sole voting and investment power with respect to these shares.
(3) Information in the table is based upon information filed by Mr. Dutil with
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, and representations made by Mr. Dutil to the Company.
Because Mr. Dutil beneficially owns a majority of the outstanding shares of
Common Stock, Mr. Dutil will be able to elect the nominees of the Board of
Directors as Class III directors, and ratify the appointment of Grant Thornton
LLP regardless of how other shareholders of the Company may vote at the Annual
Meeting.
2
<PAGE>
MATTER NO. 1
ELECTION OF DIRECTORS
GENERAL
The Company's Articles of Incorporation provide that the number of
directors shall consist of not less than one nor more than twenty-five members,
as fixed by the Board of Directors from time to time. The Articles also divide
the Board into three classes, which under applicable law, must be, in terms of
the number of directors in each class, as nearly equal as possible. In August
1999, the Board of Directors, in accordance with the Company's Bylaws, increased
the size of the Board of Directors from seven to eight members, and increased
the number of directors in Class III from two to three members. Effective
October 1, 1999, the Board of Directors elected Mr. John R. Wright, Jr. as a
Class III director to fill the vacancy resulting from the increase in the size
of the Board.
The Company's Board of Directors is divided into the following three
classes: Class I Directors, whose term expires in 2001; Class II Directors whose
term expires in 2002; and Class III directors whose term expires in 2000 at the
Annual Meeting and, if and when elected at the Annual Meeting, whose term will
expire in 2003. The directors in each Class serve terms of three years each
until their successors are elected and qualified.
The Board of Directors has unanimously nominated Mr. Jean-Claude Arpin, Mr.
Marc Guindon, and Mr. John R. Wright, Jr., for election as Class III directors.
Mr. Jean-Claude Arpin, Mr. Marc Guindon, and Mr. John R. Wright, Jr., are
presently directors of the Company.
The three nominees who receive the highest number of votes at the Annual
Meeting will be elected as Class III directors. Shares represented by properly
executed proxies will be voted for the three Class III nominees listed below
unless otherwise specified on a shareholder's proxy card. Any shareholder who
wishes to withhold authority from the proxyholders to vote for the election of
directors, or to withhold authority to vote for any individual nominee, may do
so by marking the proxy to that effect. Shareholders cannot cumulate votes for
the election of directors. No proxy may be voted for a greater number of persons
than the number of nominees named.
Each of the nominees has consented to being named in this Proxy Statement
and to serve if elected. If any of the nominees becomes unable to accept the
nomination or election, the proxyholders may exercise their voting power in
favor of such other person or persons as the Board of Directors may recommend.
The Company, however, has no present reason to believe that any nominee listed
below will be unable to serve as a director, if elected.
NOMINEES FOR ELECTION AS DIRECTOR AND CONTINUING DIRECTORS
The following tables set forth, as to each of the nominees for election as
Class III directors and as to each of the continuing Class I and Class II
directors, his or her age and the period during which he or she has served as a
director of the Company.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
- ---- --- --------
<S> <C> <C>
NOMINEES FOR ELECTION IN 2000 AS CLASS III
DIRECTORS TO SERVE UNTIL 2003
Jean-Claude Arpin........................................... 53 1994
Marc Guindon................................................ 56 1990
John R. Wright, Jr.......................................... 39 1999
CONTINUING CLASS I DIRECTORS TO SERVE UNTIL 2001
Paul Gobeil................................................. 58 1994
Nycol Pageau-Goyette........................................ 56 1994
CONTINUING CLASS II DIRECTORS TO SERVE UNTIL 2002
Pierre Desjardins........................................... 58 1996
Marcel Dutil................................................ 57 1990
Bernard Gouin............................................... 47 1996
</TABLE>
3
<PAGE>
The principal occupation and business experience during the last five years
of each nominee for election as a director of the Company and of each continuing
director of the Company is as follows:
Jean-Claude Arpin. From 1988 to 1999, Mr. Arpin served as a Vice President
of Royal Bank Capital Corporation, a wholly owned subsidiary of the Royal Bank
of Canada. Since November 1999, Mr. Arpin has served as Managing Director of
Royal Bank Ventures, Inc., also a wholly owned subsidiary of Royal Bank of
Canada. Mr. Arpin serves as a director of Motion International and Consolidated
Envirowaste Industries, Inc., each of which is a publicly owned Canadian
company.
Pierre Desjardins. Since September 1996, Mr. Desjardins has served as
Chief Executive Officer of the Company, and since April 1997, Chairman of the
Board of the Company. During the period from September 1996 through September
1999, Mr. Desjardins also served as President. From 1990 to 1994, he was
President and Chief Executive Officer of Domtar, Inc., a publicly owned Canadian
pulp and paper corporation. He is currently a director of Uni-Select Inc., a
publicly owned, Canadian company engaged in the distribution of parts and
systems for motor vehicles and is a consultant for The Canam Manac Group, Inc.,
a publicly owned Canadian industrial corporation engaged in the manufacture of
construction steel components and trailers in Canada, the United States, France
and Mexico.
Marcel Dutil. Since 1973, Mr. Dutil has been Chairman of the Board,
President, and Chief Executive Officer of The Canam Manac Group, Inc. Mr. Dutil
serves as a director of The National Bank of Canada, Quebec Tel Group, Inc. The
Jean Coutu Group (PJC) Inc., Donohue Inc., and Leroux Steel Inc., each of which
is a publicly owned company.
Paul Gobeil. Since October 1990, Mr. Gobeil has served as Vice Chairman of
the Board of Directors of Metro Inc., a publicly owned Canadian food corporation
and is currently Chairman of the Board of Directors of BridgePoint International
Inc., a publicly owned Canadian services provider for the Telecom Industry. From
December 1989 through September 1993, Mr. Gobeil served as Chairman of the Board
of Royal Trust Company, a trust corporation. He also served as Chairman of the
Board of Domtar Inc., a publicly owned Canadian pulp and paper corporation, from
April 1993 through October 1994. Mr. Gobeil is currently a director of The Canam
Manac Group, Inc., DiagnoCure Inc., a biotechnology company, and the National
Bank of Canada, all of which are publicly owned Canadian corporations.
Bernard Gouin. Since February 1997, Mr. Gouin has been Chief Financial
Officer of The Canam Manac Group, Inc. for which Mr. Gouin served as Chief
Financial Officer from 1991 to 1992. From 1994 to early 1997, he was President
of Belgo Corporation, a distributor of electricity-saving products and a
provider of financial management services. From 1992 to 1994, he served as
Executive Vice President of Canam Steel Corporation, a manufacturer of
construction steel components and the American subsidiary of The Canam Manac
Group, Inc.
Nycol Pageau-Goyette. Since 1977, Ms. Pageau-Goyette has served as
President and Chief Executive Officer of Pageau-Goyette Associates, a management
company. She is also Chairperson of the Board and Chief Executive Officer of
Aeroport de Montreal (the local airport authority of Montreal, Canada). Ms.
Pageau-Goyette serves as a director of Stella Jones Inc. and LGS Inc., which are
publicly owned Canadian companies.
Marc Guindon. Mr. Guindon is a co-founder of the Company and formerly
served as Chairman of the Board from 1990 to 1996, and currently as a director
of the Company since 1990, and as Chief Executive Officer from May 1993 to
September 1996. From 1985 to 1991, Mr. Guindon served as President and Chief
Executive Officer of a privately held Canadian corporation which, until February
13, 1996, held a majority of the Common Stock of the Company.
John R. Wright, Jr. Mr. Wright joined the Company in June 1997 as Vice
President Operations. In December 1998, he became Vice President of Marketing
and Engineering. In October 1999, he became President and Chief Operating
Officer and was elected to the Board of Directors of the Company. From 1982 to
1997 Mr. Wright was Director of Materials Management for Lukens, a specialty
steel manufacturer. Prior responsibilities at Lukens included corporate
planning, manager, and various sales positions.
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information concerning the number of shares
of Common Stock held as of the Record Date by each nominee for director, each
present director, each executive officer named in the compensation table set
forth elsewhere herein, and all directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
--------------------------------------------------------
TOTAL SOLE VOTING SHARED VOTING
BENEFICAL OR DISPOSITIVE OR DISPOSITIVE PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP POWER POWER CLASS(1)
- ------------------------ --------- -------------- -------------- ----------
<S> <C> <C> <C> <C>
Jean-Claude Arpin(2)........................... 5,000 5,000 -- --
Pierre Desjardins(3)........................... 296,000 295,000 1,000(4) 6.04%
Marcel Dutil(5)................................ 2,649,000 2,649,000 -- 56.69%
Nycol Pageau-Goyette........................... 200 200 -- --
Paul Gobeil.................................... 20,000 20,000 -- --
Bernard Gouin.................................. -- -- -- --
Marc Guindon(2)................................ -- -- -- --
John Wright, Jr.(2)(6)......................... 40,000 40,000 -- --
<CAPTION>
OTHER NAMED EXECUTIVE OFFICERS
- -----------------------------------------------
<S> <C> <C> <C> <C>
Jeffrey Boehmer(7)............................. 62,000 62,000 -- 1.31%
Richard DiMaggio(8)............................ 30,000 30,000 -- --
Keith R. Ruck(9)............................... 13,500 13,500 -- --
All directors and named executive officers as a
group (11 persons)........................... 3,115,700 3,114,700 1,000 62.04%
</TABLE>
- ------------------
(1) Unless otherwise indicated, amount owned does not exceed 1% of the total
number of shares of Common Stock outstanding as of the Record Date.
(2) Indicates a nominee for election as a Class III director at the Annual
Meeting.
(3) Includes 225,000 shares which may be acquired by Mr. Desjardins upon
exercise of presently exercisable options granted in September 1996 in
connection with his employment.
(4) Includes 1,000 shares of Common Stock owned by Mr. Desjardins' spouse with
respect to which Mr. Desjardins disclaims beneficial ownership.
(5) Includes 2,649,000 shares of Common Stock indirectly, beneficially owned by
Marcel Dutil. Mr. Dutil possesses sole voting and investment control with
respect to such shares.
(6) Includes 20,000 shares which may be acquired by Mr. Wright upon the exercise
of options granted under the Company's 1994 Stock Compensation Plan (the
"1994 Plan") which are vested and presently exercisable or exercisable
within 60 days after the Record Date. Does not include 105,000 shares which
may be acquired by Mr. Wright in the future in connection with options
granted under the 1994 Plan which are not vested and are not exercisable
within 60 days after the Record Date.
(7) Includes 62,000 shares which may be acquired by Mr. Boehmer upon the
exercise of options granted under the Company's 1994 Plan which are vested
and presently exercisable or exercisable within 60 days after the Record
Date. Does not include 18,000 shares which may be acquired by Mr. Boehmer in
the future in connection with options granted under the 1994 Plan which are
not vested and are not exercisable within 60 days after the Record Date.
(8) Includes 30,000 shares which may be acquired by Mr. DiMaggio upon the
exercise of options granted under the Company's 1994 Plan which are vested
and presently exercisable or exercisable within 60 days after the Record
Date. Does not include 20,000 shares which may be acquired by Mr. DiMaggio
in the future in connection with options granted under the 1994 Plan which
are not vested and are not exercisable within 60 days after the Record Date.
(9) Includes 12,000 shares which may be acquired by Mr. Ruck upon the exercise
of options granted under the Company's 1994 Plan which are vested and
presently exercisable or exercisable within 60 days after the Record Date.
Does not include 18,000 shares which may be acquired by Mr. Ruck in the
future in connection with options granted under the 1994 Plan which are not
vested and are not exercisable within 60 days after the Record Date.
5
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has a standing Audit Committee and
Compensation Committee. The entire Board of Directors of the Company assumes the
role of a nominating committee. Pursuant to the Company's Bylaws, the Board of
Directors is authorized to create such other permanent or temporary committees
as it deems necessary. The Chief Executive Officer of the Company is an
ex-officio member of all committees of the Board of Directors.
The Audit Committee serves as the principal liaison among the Board of
Directors, the Company's independent accountants and the Company's internal
staff in connection with the Company's audit function. In addition, the Audit
Committee makes recommendations to the Board of Directors concerning the
selection of independent accountants to audit the books and accounts of the
Company and the performance of nonaudit services. The present members of the
Audit Committee are Messrs. Desjardins, Gobeil, Gouin, and Guindon. The Audit
Committee met five times during 1999.
The Compensation Committee makes recommendations to the Board of Directors
with respect to compensation of members of the Company's executive staff. The
members of the Compensation Committee are Messrs. Arpin, Dutil, Gobeil and
Desjardins. The Compensation Committee met three times during 1999.
BOARD MEETINGS
During 1999, the Board of Directors held six regular meetings. All members
of the Board attended each of the regular meetings, except for one member who
was not present at one meeting, and all members attended all meetings of
committees of which he or she is a member.
COMPENSATION PAID TO DIRECTORS
Directors of the Company who are not executive officers of the Company are
paid a quarterly retainer of $2,500 plus $500 per Board meeting attended. In
addition, outside directors receive $250 for each regular committee meeting they
attend.
The Company maintains a directors' and officers' liability insurance policy
with National Union Fire Insurance Company of Pittsburgh, Pennsylvania. The
policy covers all directors, officers and employees of the Company and its
subsidiaries for liability, loss, damage and expense which they may incur in
their capacities as such (subject to certain exclusions and exceptions), at a
premium cost to the Company, as of the date of the Annual Meeting, of
approximately $90,000 per year.
6
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
ROLE OF THE COMPENSATION COMMITTEE
The role of the Compensation Committee of the Board of Directors of the
Company is to establish the compensation philosophy of the Company and monitor
compensation plans and amounts for conformity with the philosophy.
The Compensation Committee's role includes establishing company-wide
compensation and benefits plans, reviewing and adopting the Chief Executive
Officer's (the "CEO") recommendations for compensation for executive and other
senior officers, and reviewing and determining the compensation for the CEO.
The Compensation Committee generally meets once a year. All actions of the
Compensation Committee are reported to the full Board of Directors for
ratification. The CEO is a member of the Compensation Committee but does not
vote on any matters impacting the CEO's compensation or employment status.
EXECUTIVE COMPENSATION PHILOSOPHY
The Company's executive officer compensation program is predicated on a
pay-for-performance philosophy, and as such, a substantial part of the
executives' compensation is performance-based. Within this framework, the total
compensation program must enable the Company to attract, retain, motivate, and
reward executive officers who are critical to the success of the Company.
Total compensation for executive officers at the Company is a mixture of
non-variable elements such as salary and benefits and variable elements such as
short-term and long-term incentives. Total compensation can vary from year to
year given the Company's considerable emphasis on the incentive compensation
programs. Therefore, total compensation for executive officers at the Company is
contingent on incentive plans which are themselves tied to the Company's
financial performance.
The Revenue Reconciliation Act of 1993 imposes a limit of $1,000,000 on
annual compensation to certain executives or the corporation loses the ability
to deduct compensation in excess of such amount, subject to certain exceptions.
The Compensation Committee did not specifically design the Company's
compensation program for 1999 to meet the requirements of the Act because the
Compensation Committee does not believe that compensation payable to any
executive officer during 1999 will result in any loss of deduction to the
Company.
SPECIFIC EXECUTIVE COMPENSATION PROGRAMS
In connection with setting executive compensation, the Compensation
Committee reviews (a) the compensation paid to the executive in the preceding
year against the executive officer's performance as outlined by the CEO and the
President of the Company, (b) the results of operations of the Company for the
year against the projected results of operations of the Company for the period,
and (c) any other factor which the Committee deems relevant, in any applicable
year, in assessing the performance of an executive (the "Compensation
Criteria").
The components of total compensation at the Company include salary,
short-term and long-term incentives, benefits and perquisites. Set forth below
is a discussion of each of these components.
SALARY
Salary serves as the foundation for the Company's total compensation
program. Salaries have been established for all positions including executive
officers. Salaries are based on competitive pay practices and on the Company's
assessment of the importance of the position. Certain executive officers have
entered into employment agreements with the Company which provide for the
payment of a pre-established base salary that is subject to an annual review by
the entire Board for the purpose of considering possible increases in such
salaries. See "Employment Contracts, Termination of Employment and
Change-in-Control
7
<PAGE>
Arrangements" herein. Salary adjustments for all positions are considered at the
beginning of each calendar year and are based on the Compensation Criteria.
INCENTIVE PLANS
The Company awards cash bonuses to its executive officers as its short-term
incentive plan. The cash bonus plan for executive officers is designed to reward
the accomplishment of specific annual financial objectives. Awards, in the form
of cash compensation, are made to plan participants based upon the Company's
pre-tax income and discretionary objectives. Under the cash bonus plan, each
executive officer is entitled to receive a cash bonus in an amount ranging from
zero to 18.75% of base salary and could be as high as 37.5% for exceptional
results if the Company earned a pre-determined target amount of pre-tax income
(the "Target Income") for the year ended December 31, 1999 as well as zero to
12.5% of base salary earned by meeting certain discretionary objectives. In
addition, executive officers are entitled to receive an aggregate cash bonus in
an amount equal to 15% of pre-tax income in excess of the Target Income.
The Company uses a stock compensation plan as its long-term incentive plan.
The purpose of this plan is to motivate and reward long-term performance defined
as the creation of shareholder value and the achievement of consistent,
long-term return on equity goals.
The stock option plan relates a significant portion of executive
compensation to increases in shareholder value. The plan promotes increased
ownership of Common Stock by executives, as well as providing significant
compensation when shares are sold at a price in excess of the exercise price.
All grants under the option plan are made at fair market value as of the
date of grant. The number of options granted to each executive officer is based
on the Compensation Criteria and on the potential long-term value of any options
granted and the total number of options to be granted in any year as a
percentage of total shares outstanding.
BENEFITS AND PERQUISITES
The Company's executives participate in the same benefit program as applies
to all employees of the Company. There are no additional insurance programs or
welfare benefits for executives. Any perquisites for executives are
business-related and are intended to allow the executive to operate in as
efficient a manner as possible.
SUMMARY
The Compensation Committee believes that the Company's overall executive
compensation program has performed well in attracting, retaining and rewarding
executives.
COMPENSATION COMMITTEE
Jean-Claude Arpin, Marcel Dutil, Pierre Desjardins, Paul Gobeil
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information for the years ended December 31,
1999, 1998 and 1997, concerning compensation for services in all capacities
awarded to, earned by or paid to (i) the chief executive officer, and (ii) the
other executive officers of the Company who earned more than $100,000 during
1999 (collectively, the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ---------------
-------------------------- SECURITIES ALL OTHER
SALARY BONUS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) OPTIONS/SARS(2) ($)
- --------------------------- ---- -------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Pierre Desjardins....................... 1999 $250,000 -- -- N/A
Chairman of the Board and 1998 300,000 $180,000 -- N/A
Chief Executive Officer 1997 300,000 N/A -- N/A
John R. Wright, Jr...................... 1999 $147,250 -- 75,000 N/A
President and Chief 1998 117,500 $ 55,900 20,000 N/A
Operating Officer 1997 59,583 3,440 30,000 N/A
Jeffrey Boehmer......................... 1999 $110,000 -- 10,000 N/A
Vice President--Operations 1998 101,667 $ 44,688 -- N/A
1997 100,000 N/A -- N/A
Richard DiMaggio........................ 1999 $135,000 -- -- N/A
Vice President 1998 135,000 $ 33,345 -- N/A
1997 120,000 N/A -- N/A
Keith R. Ruck........................... 1999 $110,000 -- -- N/A
Vice President Finance and 1998 75,025 $ 36,500 30,000 N/A
Chief Financial Officer 1997 N/A N/A N/A N/A
</TABLE>
- ------------------
"N/A" indicates that the item is not applicable because no compensation of the
category required to be disclosed in the column was received.
(1) Amounts listed as bonus were accrued in the year listed but were not paid
until the subsequent year.
(2) Indicates number of shares for which options were granted under the
Company's stock compensation plans during the applicable periods.
9
<PAGE>
The following table sets forth information concerning grants of stock
options for the fiscal year ended December 31, 1999 to the Named Executive
Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES % OF TOTAL EXERCISE ANNUAL RATES OF PRICE
UNDERLYING OPTIONS/SARS OR BASE APPRECIATION FOR
OPTIONS/SARS GRANTED TO PRICE OPTION TERM
GRANTED(1) EMPLOYEES IN (2) EXPIRATION ----------------------
(#) FISCAL YEAR ($/SH) DATE 5% ($)(3) 10% ($)(3)
------------ ------------ -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Pierre Desjardins............. 0 N/A N/A N/A N/A N/A
John R. Wright, Jr............ 75,000 60.00% $2.59 8/5/09 $122,163 $309,584
Jeffrey Boehmer............... 10,000 8.00% $2.75 12/10/09 $ 17,295 $ 43,828
Richard DiMaggio.............. 0 N/A N/A N/A N/A N/A
Keith R. Ruck................. 0 N/A N/A N/A N/A N/A
</TABLE>
- ------------------
(1) All amounts represent incentive stock options. No SARs or SARs granted in
tandem with options were granted during 1999. Options have a term of ten
years from the date of grant. Options vest at the rate of 20% per year for
five consecutive years beginning one year from the date of grant. Options
are not exercisable following an optionee's voluntary termination of
employment other than by reason of retirement or disability.
(2) In the case of each option grant, the exercise price per share is equal to
the fair market value on the date the option was granted. The exercise price
may be paid in cash, in shares of Common Stock valued at fair market value
on the date of exercise or pursuant to a cashless exercise procedure under
which the optionee provides irrevocable instructions to a brokerage firm to
sell the purchased shares and to remit to the Company, out of the sale
proceeds, an amount equal to the exercise price plus all applicable
withholding taxes.
(3) The dollar amounts set forth under these columns are the result of
calculations made at the 5% and 10% appreciation rates set forth in
Securities and Exchange Commission regulations and are not intended to
indicate future price appreciation, if any, of the Common Stock.
10
<PAGE>
The following table sets forth information concerning the exercise of
options to purchase shares of Common Stock by the Named Executives during the
fiscal year ended December 31, 1999, as well as the number of securities
underlying unexercised options and potential value of unexercised options (both
options which are presently exercisable and options which are not presently
exercisable) as of December 31, 1999.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUE(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
VALUE OPTIONS/SARS AT OPTIONS/SARS AT
SHARES ACQUIRED REALIZED FISCAL YEAR-END (#) FISCAL YEAR-END ($)(2)
NAME ON EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Pierre Desjardins............ 0 0 225,000 / 0 $0 / $0
John R. Wright, Jr........... 0 0 16,000 / 109,000 0 / 0
Jeffrey Boehmer.............. 0 0 54,000 / 26,000 0 / 0
Richard DiMaggio............. 0 0 30,000 / 20,000 0 / 0
Keith R. Ruck................ 0 0 6,000 / 24,000 0 / 0
</TABLE>
- ------------------
(1) All amounts represent stock options. No SARs or SARs granted in tandem with
stock options were either exercised during 1999 or outstanding at fiscal
year-end 1999.
(2) "In-the-money options" are stock options with respect to which the market
value of the underlying shares of Common Stock exceeded the exercise price
at December 31, 1999. The value of such options is determined by subtracting
the aggregate exercise price for such options from the aggregate fair market
value of the underlying shares of Common Stock.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
As of September 3, 1996, the Company entered into an employment agreement
with Pierre Desjardins under which Mr. Desjardins served as President and Chief
Executive Officer of the Company. The initial term of the employment agreement
is three years, subject to an automatic one-year extension on each anniversary
date thereof, unless the Company gives written notice to Mr. Desjardins of an
intention not to renew. Mr. Desjardins received an annual base salary of
$300,000 per year under the employment agreement. Mr. Desjardins was granted
options to purchase 225,000 shares of Common Stock. During August 1999, Mr.
Desjardins entered into a new employment agreement where, starting October 1,
1999 he serves as Chairman and Chief Executive Officer of the Company at an
annual base salary of $100,000 per year. The Company may terminate the
employment agreement for cause. In the event the Company terminates the
employment agreement without cause (as defined in the employment agreement), Mr.
Desjardins is entitled to, among other things, an amount equal to the total
salary due for the unexpired term of the employment agreement.
During 1999, the Company entered into a new employment agreement with John
R. Wright, Jr. in his capacity as President and Chief Operating Officer. The
Company entered into employment agreements with Keith R. Ruck, Richard DiMaggio,
and Jeffrey Boehmer in 1998, 1996 and 1994, respectively. Under their respective
employment agreements, Keith R. Ruck, serves as Vice President of Finance,
Richard DiMaggio serves as Vice President, and Jeffrey Boehmer serves as Vice
President Operations. The initial term of each employment agreement is three
years, subject to an automatic one-year extension on each anniversary date
thereof, unless either party gives notice to the other of an intention not to
renew. The terms of the employment agreements provide an annual base salary of
$175,000 to Mr. Wright, $110,000 to Mr. Ruck, $135,000 to Mr. DiMaggio, and
$110,000 to Mr. Boehmer. The employment agreements provide for an annual review
by the Board of the executives' base salaries for purposes of considering
possible increases thereto. The employment agreements also provide for the
payment of bonuses and the award of stock options in such amounts as shall be
determined by the Board. In addition, in the event of termination by the Company
of an executive as a result of disability or without cause (as defined in the
employment agreements), the terminated executive is entitled to continued
payments of his base salary for a period not to
11
<PAGE>
exceed the lesser of: (a) six months, or in the case of Mr. Wright, nine months,
or (b) the date of the executive's death, which amount will be offset by any
payments received by the executive under any disability plan sponsored by the
Company. The employment agreements also contain certain confidentiality,
non-competition and non-solicitation provisions. One of the employment
agreements contains a change-in-control provision.
ADDITIONAL INFORMATION REGARDING DIRECTORS AND OFFICERS
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers, and any persons
owning ten percent or more of the Common Stock, to file in their personal
capacities initial statements of beneficial ownership, statements of changes in
beneficial ownership and annual statements of beneficial ownership with the
Securities and Exchange Commission (the "SEC"). Persons filing such beneficial
ownership statements are required by SEC regulation to furnish the Company with
copies of all such statements filed with the SEC. The rules of the SEC regarding
the filing of such statements require that "late filings" of such statements be
disclosed in the Company's proxy statement. Based solely on the Company's review
of any copies of such statements it received and on written representations from
directors and officers, the Company believes that all such statements were
timely filed in 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Pierre Desjardins, Chairman and Chief Executive Officer of the Company,
serves as a member of the Compensation Committee, although he does not
participate in or vote on matters concerning his own benefits or awards. The
Board of Directors believes that Mr. Desjardins' position with the Company
provides him with perspective valuable to the Compensation Committee in
connection with performance of its duties.
OTHER
Richard DiMaggio, Vice President of the Company, leases space to the
Company and American Containment, Inc. ("ACI"), a wholly owned subsidiary of the
Company, for ACI's office and the Company's fiberglass manufacturing facility,
both of which are located in Bakersfield, California. The aggregate monthly
rental for this space is $7,700, excluding operating expenses and reimbursement
for electricity. The Company believes that the amount of rent charged by Mr.
DiMaggio is not in excess of the amount of rent charged by unrelated parties for
similar premises in the area.
In September 1999, the Company refinanced all of its long-term debt of
approximately $1.9 million with a new, five-year, $4 million facility with
Finloc, Inc. ("Finloc"). The facility charges interest at the rate of LIBOR plus
4.00% (9.83% at December 31, 1999). The loan is in the form of a six-month
promissory note which requires payment of the entire principal amount and
accrued interest at the expiration of its term. Finloc has provided written
notice of its intent to renew this note every six months for a period of five
years with a reduction of principal of approximately $400,000 upon each renewal.
Marcel E. Dutil, a director of the Company, is the indirect beneficial owner of
56.9% of the Company's stock through his control of Finloc, which directly owns
56.9% of the Company's outstanding common stock.
12
<PAGE>
PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative total
stockholder return on the Company's Common Stock against the cumulative total
return on the Nasdaq Market Value Index and Peer Group Index 621 for the periods
indicated. The graph assumes an initial investment of $100.00 on January 1, 1995
with dividends, if any, reinvested over the periods indicated.
{GRAPHIC}
In the printed version of the document, a line graph appears which depicts
the following plot points:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
JANUARY 1, -----------------------------------------------
1995 1995 1996 1997 1998 1999
---------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
The Company.......................... $ 100.00 $ 45.71 $ 38.57 $ 31.43 $ 79.29 $ 24.29
Peer Group Index 621(1).............. 100.00 131.42 155.75 219.71 199.70 214.94
NASDAQ Market Value Index............ 100.00 129.71 161.18 197.16 278.08 490.46
</TABLE>
- ------------------
(1) The Composition of Peer Group Index 621 is as follows: Aztec Manufacturing
Co., BMC Industries, Inc., Circor International Inc., CompX International
Inc., Driver-Harris Co., Intermagnetics General Corporation, Kinark Corp.,
Margate Industries Inc., Masco Corp., Material Sciences Corp., Morton
Industrial Group Inc., Parker-Hannifen Corp., Raytech Corp., Richton
International Corp., The Shaw Group Inc., Sun Hydraulics Corp., Total
Containment, Inc., United Capital Corp. and Watts Industries Inc.
13
<PAGE>
MATTER NO. 2
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed the firm of Grant
Thornton LLP, independent accountants, to provide auditing and accounting
services for the Company and its subsidiaries during fiscal year 2000. Such
appointment is being submitted to shareholders for ratification.
Grant Thornton LLP has conducted the audit of the financial statements of
the Company and its subsidiaries for the year ended December 31, 1999.
Representatives of Grant Thornton LLP are expected to be present at the Annual
Meeting. These representatives will be given an opportunity to make a statement
if they desire to do so, and will be available to answer appropriate questions
from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY'S INDEPENDENT AUDITORS
FOR THE 2000 FISCAL YEAR. The affirmative vote of a majority of the shares
present, in person or by proxy, at the Annual Meeting is required to ratify the
appointment. All proxies will be voted "FOR" ratification of the appointment
unless a shareholder specifies to the contrary on such shareholder's proxy card.
SHAREHOLDER PROPOSALS FOR 2001
Shareholders may propose matters for consideration at annual meetings of
shareholders by notice in writing, delivered to or mailed and received by the
Secretary of the Company no later than February 14, 2001. If proposals are
submitted after February 14, 2001, management proxyholders could have
discretionary authority to vote on those proposals at the 2001 annual meeting.
The 2001 Annual Meeting of Shareholders of the Company will be held on or
about May 2, 2001. Any shareholder desiring to submit a proposal to be
considered for inclusion in the 2001 proxy materials must submit such proposal
or proposals in writing, addressed to the Company at 422 Business Center, A130
North Drive, Oaks, Pennsylvania 19456, Attention: Secretary, on or before
December 1, 2000.
DIRECTOR NOMINATIONS BY SHAREHOLDERS
The Bylaws of the Company permit nominations for election to the Board of
Directors to be made by the Board of Directors or by any shareholder entitled to
vote for the election of directors. All shareholder nominations are referred to
the Board of Directors or a committee of the Board of Directors for
consideration. In determining the nominees for director for 2001, the Board will
consider nominees recommended by shareholders. Such shareholder recommendations
should be made in writing no later than January 1, 2001, addressed to Corporate
Secretary, 422 Business Center, A130 North Drive, P.O. Box 939, Oaks,
Pennsylvania 19456.
Under the Bylaws, nominations for director to be made at the Annual Meeting
by shareholders entitled to vote for the election of directors must be preceded
by written notice, received at the principal executive office of the Company not
less than 90 days prior to the Annual Meeting; provided, however, that if less
than 15 days' notice of the Annual Meeting is given to shareholders, such
written notice must be delivered to the Company not later than the close of the
third day following the day on which notice of the Annual Meeting was mailed to
shareholders. The notice must contain certain information specified in the
Bylaws, and should be delivered or mailed to the attention of the Secretary of
the Company. No notice of nomination for election as a director has been
received from any shareholder as of the date of this Proxy Statement. If a
nomination is attempted at the Annual Meeting which does not comply with the
procedures required by the Bylaws or if any votes are cast at the Annual Meeting
for any candidate not duly nominated, then such nomination and/or such votes may
be disregarded.
14
<PAGE>
OTHER MATTERS
The Board of Directors does not intend to bring any other matter before the
Annual Meeting and is not presently informed of any other business which others
may bring before the Annual Meeting. If any other matters should properly come
before the Annual Meeting, or any adjournment or adjournments thereof, however,
it is the intention of the persons named in the accompanying proxy to vote on
such matters as they, in their discretion, may determine.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Richard H. Gross
---------------------
Richard H. Gross, Secretary
March 30, 2000
PLEASE SIGN, DATE AND MAIL YOUR PROXY NOW.
15
<PAGE>
{LOGO}
NOTICE OF 2000 ANNUAL MEETING AND
PROXY STATEMENT
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
TOTAL CONTAINMENT, INC.
MAY 2, 2000
<TABLE>
<CAPTION>
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
_ |
A [X] PLEASE MARK YOUR | |_
VOTES AS IN THIS
EXAMPLE.
<S> <C> <C> <C>
FOR all nominees WITHHOLD NOMINEES: Jean-Claude Arpin
listed at right AUTHORITY Marc Guindon
(except as marked to vote for all John R. Wright, Jr.
to the contrary) nominees listed at right.
MATTER NO. 1. [ ] [ ]
ELECTION OF
CLASS III
DIRECTORS
(INSTRUCTION: To withhold authority to vote for any
individual nominee, strike a line through the nominee's
name in the list at right.)
MATTER NO. 2. RATIFICATION OF GRANT THORNTON FOR [ ] AGAINST [ ] ABSTAIN [ ]
LLP AS INDEPENDENT AUDITORS.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY USING
THE ENCLOSED ENVELOPE.
_______________________________ ______________________________ Dated: ________, 2000
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
NOTE: Please sign exactly as name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
TOTAL CONTAINMENT, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I/We hereby appoint Keith R. Ruck and Jeffrey A. Boehmer, or any one of
them acting in the absence of the others, as proxyholders, each with the power
to appoint his substitute, and hereby authorize them to represent and to vote,
as designated on the reverse side, all the shares of Common Stock of Total
Containment, Inc., (the "Company") held of record by me/us on February 25, 2000,
at the Annual Meeting of Shareholders to be held on May 2, 2000 or at any and
all adjournments thereof.
This proxy, when properly executed, will be voted in the manner directed on
the reverse side. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES FOR DIRECTOR AND FOR THE RATIFICATION OF INDEPENDENT
AUDITORS. This proxy will be voted, in the discretion of the proxyholders, upon
such other business as may properly come before the Annual Meeting of
Shareholders or any adjournment thereof as provided in the rules of the
Securities and Exchange Commission.
(PLEASE VOTE AND SIGN ON THE OTHER SIDE.)
- --------------------------------------------------------------------------------
