SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registration [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, For Use of the
Commission Only (as permitted by
Rule 14A-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Mace Security International, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act rules 14a-6(i)(L) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
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[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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[LETTERHEAD OF MSI]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Date: December 12, 2000
Time: 10:00 AM, Eastern Time
Location
The DoubleTree Hotel
Cypress Room
515 Fellowship Road North
Mt. Laurel, New Jersey 08054
To Mace Security International, Inc. Stockholders:
We invite you to attend our 2000 Annual Meeting of Stockholders. At this
meeting, you and the other stockholders will be able to vote on the following
proposals, together with any other business that may properly come before the
meeting:
1. Election of seven directors to the Board of Directors for one year
terms. The Board has nominated for election Louis D. Paolino, Jr.,
Mark S. Alsentzer, Jon E. Goodrich, Robert M. Kramer, Richard B. Muir,
Matthew J. Paolino and Constantine N. Papadakis.
2. Approval and adoption of an amendment to Mace's Amended and Restated
Certificate of Incorporation to decrease the number of authorized
shares of Common Stock from 200,000,000 to 50,000,000 and decrease the
number of authorized shares of Preferred Stock from 50,000,000 to
10,000,000.
3. Ratification of the Board's appointment of Grant Thornton LLP as
Mace's independent auditors for fiscal year 2000.
You may vote on these proposals in person by attending the Annual Meeting
or by proxy. The attached proxy statement provides details on voting by proxy.
If you cannot attend the Annual Meeting, we urge you to complete and return the
enclosed proxy promptly in the enclosed self-addressed stamped envelope so that
your shares will be represented and voted at the Annual Meeting in accordance
with your instructions. Of course, if you attend the Annual Meeting, you may
withdraw your proxy and vote your shares.
Only stockholders of record at the close of business on November 2, 2000,
can vote at the Annual Meeting or any adjournment or postponement of the Annual
Meeting.
By Order of the Board of Directors,
Mt. Laurel, New Jersey Robert M. Kramer
November 7, 2000 Secretary
TABLE OF CONTENTS
-----------------
Page
----
Introduction.................................................................. 1
About This Proxy Solicitation............................................... 1
About the Annual Meeting.................................................... 2
Voting at the Annual Meeting................................................ 3
How To Vote Your Shares..................................................... 3
The Proposals................................................................. 4
Proposal 1. Election of Directors........................................... 4
Proposal 2. Amendment of Certificate of Incorporation....................... 7
Proposal 3. Ratification of Independent Auditors............................ 8
About the Board of Directors and Executive Officers........................... 10
About the Board and its Committees........................................... 10
Executive Officers and Directors............................................. 11
Compensation of Certain Executive Officers................................... 12
Employment Agreements........................................................ 12
Biographical Information for Non-Director Executive Officers................. 14
Section 16(a) Beneficial Ownership Reporting Compliance...................... 14
The Principal Stockholders of Mace............................................ 15
Irrevocable Proxies Granted to Louis D. Paolino, Jr.......................... 16
Additional Information........................................................ 17
Certain Relationships and Related Party Transactions......................... 17
Deadline for Stockholder Proposals........................................... 19
Mace's Annual Report......................................................... 19
Appendix A - Amendment to Amended and Restated Certificate of Incorporation... A-1
[LETTERHEAD OF MSI]
------------------------------
PROXY STATEMENT
------------------------------
INTRODUCTION
The Board of Directors is soliciting proxies to be used at the 2000 Annual
Meeting of Stockholders of Mace Security International, Inc. Mace will begin
mailing this proxy statement and the enclosed form of proxy to its stockholders
on or about November 7, 2000.
The Board of Directors is soliciting your proxy to encourage you to vote on
proposals at the Annual Meeting and to obtain your support for the proposals.
You are invited to attend the Annual Meeting and vote your shares directly. If
you do not attend, you may vote by proxy, which allows you to direct another
person to vote your shares at the Annual Meeting on your behalf, using the
accompanying proxy card. Even if you plan to attend the Annual Meeting, it is a
good idea to complete, sign and return the proxy card in case your plans change.
You can always vote in person at the Annual Meeting, even if you have already
returned the proxy card.
About This Proxy Solicitation
This proxy solicitation has two parts: the proxy card and this proxy
statement.
The Proxy Card The proxy card permits you to vote by proxy, whether or not you
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attend the Annual Meeting. When you sign the proxy card, you appoint certain
individuals as your representatives at the Annual Meeting. They will vote your
shares of Mace common stock at the Annual Meeting as you have instructed on the
proxy card. If a proposal comes up for a vote that is not on the proxy card,
they will vote your shares as they deem appropriate.
This Proxy Statement This proxy statement contains important information for
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you to consider when deciding how to vote on the proposals. Please read it
carefully. It is divided into four sections following this Introduction:
Section Page Number
------- -----------
The Proposals................................................ 4
About the Board of Directors and Executive Officers.......... 10
The Principal Stockholders of Mace........................... 15
Additional Information....................................... 17
Mace will pay for soliciting these proxies. In addition to use of the mails,
Mace's directors, officers and employees may solicit proxies in person, by
telephone, facsimile or by other means, in all cases without additional
compensation. Mace will reimburse brokers, nominees, custodians and fiduciaries
for their reasonable out-of-pocket expenses in forwarding proxy materials to the
beneficial owners of Mace common stock.
About the Annual Meeting
When And Where Mace will hold the Annual Meeting on December 12, 2000, at 10:00
- --------------
AM, Eastern Time, at The DoubleTree Hotel, Cypress Room, 515 Fellowship Road
North, Mt. Laurel, New Jersey 08054.
Quorum Requirement Mace's bylaws require that a majority of outstanding shares
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of Mace common stock must be represented at the Annual Meeting, whether in
person or by proxy, constituting a quorum in order to transact business.
Abstentions and broker non-votes will be counted in determining whether or not
there is a quorum at the Annual Meeting.
The Proposals Stockholders will vote on the following proposals at the Annual
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Meeting:
. election of seven directors to one year terms;
. amendment of the Mace certificate of incorporation; and
. ratification of Mace's independent auditors.
Other Matters There were no stockholder proposals submitted for the Annual
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Meeting. Neither Mace nor its Board intend to bring any other matters before
the Annual Meeting. The Board has no present knowledge that any other matters
will be presented by others for action at the Annual Meeting. However,
stockholders will be able to vote on any other matters that properly come before
the Annual Meeting.
Presence of Independent Auditors Representatives of Grant Thornton LLP, Mace's
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independent auditors since January 10, 2000, are expected to be present at the
Annual Meeting. They will have the opportunity to make a statement at the
Annual Meeting if they choose and they are expected to be available to respond
to stockholder questions.
Representatives of Ernst & Young LLP, Mace's independent auditors from May 1999
through January 10, 2000, are not expected to be present at the Annual Meeting,
and will not make a statement nor respond to stockholder questions.
Representatives of Urbach Kahn & Werlin PC, Mace's independent auditors until
May 26, 1999, are not expected to be presented at the Annual Meeting and will
not make a statement nor be available to respond to stockholder questions.
The Stockholders As of the record date of November 2, 2000, _________ shares of
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Mace common stock were issued and outstanding. Only stockholders of record at
the close of business on November 2, 2000, are entitled to vote at the Annual
Meeting and any adjournment or postponement of the meeting. A complete list of
stockholders entitled to vote at the Annual Meeting will be available for
inspection by any stockholder for any purpose relating to the Annual Meeting for
ten days prior to the meeting during ordinary business hours at Mace's
headquarters located at 1000 Crawford Place, Suite 400, Mt. Laurel, New Jersey
08054.
2
Voting at the Annual Meeting
You are entitled to one vote for each share of Mace common stock that you owned
of record at the close of business on November 2, 2000. The presence, in person
or by proxy, of the holders of a majority of the stock issued and outstanding
and entitled to vote at the Annual Meeting is necessary to constitute a quorum.
Abstentions are counted as "shares present" at the meeting for purposes of
determining whether a quorum exists. Abstentions have the effect of a vote
"against" any matter as to which they are specified. Proxies submitted by
brokers that do not indicate a vote for some or all of the proposals because
they do not have discretionary voting authority and have not received
instructions as to how to vote on those proposals (so-called "broker non-votes")
are considered "shares present" at the meeting for purposes of determining
whether a quorum exists. Broker non-votes will not affect the outcome of the
vote on any matter unless the matter requires the affirmative vote of a majority
of the outstanding shares and in such case will have the effect of a vote
"against" that matter.
The seven nominees for director receiving the highest number of affirmative
votes shall be elected as directors. Stockholders do not have the right to
cumulate their votes in the election of directors. Each of the other proposals
are to be approved by the affirmative vote of a majority of all shares of Mace
common stock entitled to vote for such proposals that are represented at the
Annual Meeting in person or by proxy.
How To Vote Your Shares
You may vote in two ways:
. return your completed, signed and dated proxy card before the Annual
Meeting; or
. cast a written ballot in person at the Annual Meeting (you will need a
legal proxy from your stockbroker if you hold your shares in street
name).
Voting By Proxy The proxy card has simple instructions. By returning a
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completed proxy card before the Annual Meeting, you will direct the appointed
persons (known as "proxies") to vote your shares at the Annual Meeting in
accordance with your instructions. Gregory M. Krzemien and Eduardo Nieves, Jr.,
will serve as your proxies for the Annual Meeting. If you complete all of the
proxy card except for the voting instructions, then the proxies will vote your
shares for the election of the nominated directors, for the approval of the
amendment to the Amended and Restated Certificate of Incorporation, and for the
ratification of Mace's independent auditors. If any nominee for election to the
Board is unable to serve, which is not anticipated, then the designated proxies
will vote your shares for any substitute nominee chosen by the Board. If any
other matters properly come before the Annual Meeting, then the designated
proxies will vote your shares in their discretion on such matters.
How To Revoke Your Proxy You may revoke your proxy at any time before it is
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exercised at the Annual Meeting by any of the following means:
. notifying Mace's Secretary in writing (notice to be sent to Mace's
executive offices, the address for which is located on the first page
of this proxy statement); or
. submitting another proxy card with a later date; or
. attending the Annual Meeting and voting by written ballot (mere
attendance at the Annual Meeting will not by itself revoke your
proxy).
3
THE PROPOSALS
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Proposal 1. Election of Directors
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Election of seven directors to the Board of Directors for one year terms.
Nominees
--------
Louis D. Paolino, Jr. Mark S. Alsentzer Jon E. Goodrich Robert M. Kramer
Richard B. Muir Matthew J. Paolino Constantine N. Papadakis, Ph.D.
- --------------------------------------------------------------------------------
About the Nominees Each of Mace's nominees currently serves on the Board of
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Directors. Each nominee indicated that he will serve on the Board if elected.
Biographical information for each nominee appears below.
Louis D. Paolino, Jr.
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Age: 44
Director Since: May 24, 1999
Principal Occupation:
May 24, 1999-Present President and Chief Executive Officer of Mace
July 1, 1999-Present Chairman of the Board of Mace
Recent Business Experience:
June 1996-December 1998 Chairman of the Board, President and Chief
Executive Officer of Eastern Environmental
Services, Inc. (a waste management company)
September 1993-June
1996 Vice President of USA Waste Services, Inc. (a waste
management company)
Mark S. Alsentzer
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Age: 45
Director Since: December 15, 1999
Principal Occupation:
December 1996-Present President and Chief Executive Officer of US
Plastic Lumber Corporation (a lumber and
recycling company)
Recent Business Experience:
1992-December 1996 Vice President of Republic Environmental Systems,
Inc. (an environmental services company)
Other Directorships: US Plastic Lumber Corporation
Jon E. Goodrich
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Age: 55
Director Since: December 14, 1987
Principal Occupation:
May 24, 1999-Present Vice President - Security Products Division of Mace
Recent Business Experience:
March 1997-May 1999 President and Chief Executive Officer of Mace
January 1996-March 1997 Chairman of the Board of Mace
June 1987-January 1996 President and Chief Executive Officer of Mace
June 1987-June 1995 Chairman of the Board of Mace
November 1985-January Vice President of Gould & Goodrich Leather,
1997 Inc. (a leather products manufacturer)
November 1985-January President of G & G Realty, Inc. (a real estate
1997 management company)
4
Robert M. Kramer
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Age: 48
Director Since: July 1, 1999
Principal Occupation:
May 24, 1999-Present General Counsel, Secretary and Executive Vice
President of Mace
Recent Business Experience:
1989-Present Sole partner of Robert M. Kramer & Associates,
P.C. (Mr. Kramer will devote a substantial amount
of his time to performing his duties for Mace, but
on infrequent occasion he will devote time to the
private practice of law.)
June 1996-December 1998 General Counsel, Secretary and Executive Vice
President of Eastern Environmental Services, Inc.
(a waste management company)
Richard B. Muir
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Age: 45
Director Since: December 15, 1999
Principal Occupation:
1998-Present Executive Vice President and Secretary of Excel
Legacy Corp. (a real estate development company)
Recent Business Experience:
1989-May 1999 Executive Vice President and Secretary of New Plan
Excel Realty Trust, Inc. (a real estate
development company)
Other Directorships: Excel Legacy Corporation
Warner Beck, Inc. (securities broker/dealer firm)
Matthew J. Paolino
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Age: 36
Director Since: July 1, 1999
Principal Occupation:
July 1, 1999-Present Vice President of Mace
Recent Business Experience:
1996-December 1998 Vice President of Risk Management, Asset
Management and Special Waste Divisions of Eastern
Environmental Services, Inc. (a waste management
company)
1993-1996 Vice President and General Manager - Soil
Remediation Division of USA Waste Services, Inc.
(a contaminated soil treatment division acquired
by Eastern Environmental Services, Inc. in August
of 1997)
Other Information: Mr. Paolino is the brother of Louis D. Paolino,
Jr., Mace's Chairman, President and Chief
Executive Officer
5
Constantine N. Papadakis, Ph.D.
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Age: 54
Director Since: May 24, 1999
Principal Occupation:
1995-Present President of Drexel University
Recent Business Experience:
1986-1995 Dean of the College of Engineering, Geier
Professor of Engineering Education and
Professor of Civil Engineering at the
University of Cincinnati
Other Directorships: Fidelity Financial of Ohio
The Philadelphia Stock Exchange
Recommendation The board of directors recommends that you vote FOR the election
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of Louis D. Paolino, Jr., Mark S. Alsentzer, Jon E. Goodrich, Robert M. Kramer,
Richard B. Muir, Matthew J. Paolino and Constantine N. Papadakis to Mace's
board.
6
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Proposal 2. Amendment of the Certificate of Incorporation
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Approval and adoption of an amendment to Mace's Amended and Restated Certificate
of Incorporation to decrease the number of authorized shares of Common Stock
from 200,000,000 to 50,000,000 and decrease the number of authorized shares of
Preferred Stock from 50,000,000 to 10,000,000.
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The Board of Directors has unanimously approved and is proposing for stockholder
approval an amendment to Mace's Amended and Restated Certificate of
Incorporation to decrease the number of authorized shares of Common Stock from
200,000,000 to 50,000,000 and decrease the number of authorized shares of
Preferred Stock from 50,000,000 to 10,000,000, for the following reasons:
. The Board of Directors does not foresee a need in the near term to issue
numbers of shares approaching the amounts that are currently authorized
and unissued; and
. Reducing the number of authorized shares will significantly reduce the
amount of the franchise tax payable by Mace to the state of its
incorporation.
The approval and adoption of the amendment to Mace's Amended and Restated
Certificate of Incorporation will not affect in any way the validity of
currently outstanding stock certificates and will not require you to surrender
or exchange any stock certificates that you currently hold. The rights of the
Company's stockholders will not be affected by the decrease in the number of
authorized shares of Common Stock and Preferred Stock.
The Amendment to the Amended and Restated Certificate of Incorporation is set
forth in Appendix A to this proxy statement. If approved by the stockholders of
Mace, the Amendment to the Amended and Restated Certificate of Incorporation
will become effective upon its filing with the Secretary of State of the State
of Delaware on or about December 20, 2000.
Recommendation The Board of Directors recommends that you vote FOR the
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proposal to approve and adopt the Amendment to the Amended and Restated
Certificate of Incorporation.
7
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Proposal 3. Ratification of Independent Auditors
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Ratification of the Board's appointment of Grant Thornton LLP as Mace's
independent auditors for fiscal 2000.
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The Audit Committee of the Board of Directors selects the independent public
accountants to audit Mace's books of account and other corporate records. The
Audit Committee's selection of Grant Thornton LLP to audit Mace's books of
account and other corporate records for 2000, which has been approved by the
Board of Directors, is being submitted to you for ratification.
Mace's Auditors Ernst & Young LLP served as Mace's independent auditors from
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May 1999 until January 10, 2000. On January 10, 2000, Ernst & Young LLP
resigned as a result of a business conflict. On recommendation of the Audit
Committee, the Board appointed Grant Thornton LLP to serve as Mace's new
independent auditors.
About Prior Audits The rules and regulations of the SEC require Mace to make
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the following disclosures to you:
The reports of Grant Thornton LLP on Mace's consolidated financial statements
for the fiscal year ended December 31, 1999, did not contain any adverse opinion
or disclaimer of opinion, or modification or qualification as to uncertainty,
audit scope or accounting principles. In connection with its audits for the
last fiscal year, there have been no disagreements between Mace and Grant
Thornton LLP on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of Grant Thornton LLP, would have caused them to
refer to any such disagreements in their report on Mace's consolidated financial
statements for that year.
Prior to Grant Thornton LLP's engagement, Ernst & Young LLP had served as Mace's
independent auditors. Ernst & Young LLP issued an opinion with respect to the
audit of the consolidated balance sheet of Mace as of December 31, 1998, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the two years in the period ended December 31, 1998, as
restated for three "pooling of interest" acquisitions completed in 1999. The
reports of Ernst & Young LLP on Mace's consolidated financial statements as
restated for the two years ended December 31, 1998, did not contain any adverse
opinion or disclaimer of opinion, or modification or qualification as to
uncertainty, audit scope or accounting principles. In connection with its audits
for those two years, there have been no disagreements between Mace and Ernst &
Young LLP on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of Ernst & Young LLP, would have caused them to
refer to any such disagreements in their report on Mace's consolidated financial
statements for such years.
Prior to Ernst & Young LLP's engagement, Mace had engaged Urbach Kahn & Werlin
PC as Mace's independent auditors. On May 26, 1999, Urbach Kahn & Werlin PC
resigned. The reports of Urbach Kahn & Werlin PC on Mace's consolidated
financial statements for the two years ended December 31, 1998 and 1997, did not
contain any adverse opinion or disclaimer of opinion, or modification or
qualification as to uncertainty, audit scope or accounting principles. In
connection with its audits for those two years, there have been no disagreements
between Mace and Urbach Kahn & Werlin PC on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Urbach Kahn & Werlin
PC, would have caused them to refer to any such disagreements in their report on
Mace's consolidated financial statements for such years.
8
Presence of Independent Auditors Representatives of Grant Thornton LLP will be
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at the Annual Meeting, will have the opportunity to make a statement at the
Annual Meeting if they desire to do so, and will be available to respond to
appropriate questions. Representatives of neither Ernst & Young LLP nor Urbach
Kahn & Werlin PC are expected to be present at the Annual Meeting.
Recommendation The board of directors recommends that you vote FOR the
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ratification of Grant Thornton LLP as Mace's independent auditors for fiscal
year 2000.
9
ABOUT THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
About the Board and its Committees
Mace's Board is comprised of seven directors. Unless each director earlier
resigns or is removed, each director serves a one year term holding office until
the next Annual Meeting of stockholders and until their successors are elected
and qualified. Except for Jon Goodrich, all of the directors serving on Mace's
Board during 1998 resigned in connection with Louis Paolino, Jr.'s acquisition
of control of Mace. See "The Principal Stockholders of Mace - Acquisition of
Control of Mace."
During 1998, Mace's Board consisted of Jon Goodrich, Marvin P. Brown, Neil J.
Campolungo, Lewis C. Cohen, Howard Edelman, R. David Garwood and Virginia de
Ganahl Russell. Ms. Russell declined to stand for reelection at Mace's 1998
Annual Meeting of Stockholders held on September 18, 1998. On May 24, 1999,
Messrs. Cohen, Garwood and Campolungo resigned and were replaced by Louis D.
Paolino, Jr., and Constantine Papadakis. On July 1, 1999, Messrs. Brown and
Edelman resigned and were replaced by Robert Kramer, Matthew Paolino and Rodney
Proto. At Mace's 1999 annual stockholder meeting on December 15, 1999, each of
the present directors were elected to their present terms.
Mace's Board held 10 formal meetings during 1999. During 1999, all directors
attended at least 75% of Mace's Board meetings, as well as the meetings of the
committees of the Board on which they served. Mace's Board has standing Audit,
Compensation, and Acquisition Committees, and had a Nominating Committee in
1999. The following chart describes the composition and functions of the
Committees.
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Board Committees
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1999
Meetings
Committee Members Held Functions
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Audit 1999 Members . Recommends selection of independent auditors to the
------------ Board.
Constantine Papadakis 1 . Confers with independent auditors and internal personnel
Rodney Proto on the scope of auditor's examinations.
Current Members . Reviews internal audit controls and procedures.
---------------
Constantine Papadakis
Mark S. Alsentzer
Richard Muir
- ---------------------------------------------------------------------------------------------------------------
Compensation 1999 Members . Recommends executive compensation.
------------ . Administers Mace's Nonqualified Stock Option
Constantine Papadakis 1 Plan.
Rodney Proto . Administers Mace's 1999 Stock Option Plan.
Current Members
---------------
Constantine Papadakis
Richard Muir
Louis D. Paolino, Jr.
- ---------------------------------------------------------------------------------------------------------------
Acquisition 1999 Members . Reviews and approves acquisitions having a value of
------------ $5,000,000 or less.
Louis D. Paolino, Jr. 4 . Reviews and approves loans and financing
Robert M. Kramer arrangements related to acquisitions having a value of
Matthew Paolino $5,000,000 or less.
Current Members
---------------
Louis D. Paolino, Jr.
Robert M. Kramer
Matthew Paolino
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Nominating 1999 Members . Recommended persons to serve on the Board.
------------
Constantine Papadakis 1
Rodney Proto
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Fees for Attendance Through July 1, 1999, directors who were not employees of
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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. Mace paid Mr. Brown,
the former Chairman of the Board, fees of $750 per Board or Committee meeting
attended during 1998 until his resignation as Chairman on July 1, 1999.
Commencing on July 1, 1999, Mace ceased paying fees to directors,
10
but does pay non-employee directors reasonable travel and out-of-pocket expenses
relating to their attendance at meetings.
Other Director Compensation Mace granted to each of Messrs. Brown, Campolungo,
- ---------------------------
Cohen, Edelman and Garwood options to acquire 10,000 shares of Mace common stock
at $1.21 per share. Such options became fully vested upon the change of control
of the Board of Directors on July 1, 1999, and are exercisable until June 30,
2004.
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. On March
26, 1999, Mace granted options to purchase 200,000 shares and 125,000 shares of
Mace common stock at $2.6875 per share, respectively, to Robert Kramer and
Matthew Paolino, and granted a warrant to purchase 125,000 shares of Mace common
stock at the same per-share price to Rodney Proto, all in connection with the
change of control transactions described later in this proxy statement in the
section "The Principal Stockholders of Mace - Acquisition of Control of Mace."
On October 18, 2000, Mace granted options to purchase 20,000 shares of Mace
common stock at $1.2813 to each of Mace's outside directors, Richard B. Muir,
Mark S. Alsentzer and Constantine Papadakis, for their service on the Board of
Directors during 2000. Additionally, on October 18, 2000, Mace granted options
to purchase 10,000 shares of Mace common stock at $1.2813 to each of Mace's
directors, Louis D. Paolino, Jr., Robert M. Kramer, Matthew Paolino, Jon E.
Goodrich, Richard B. Muir, Mark S. Alsentzer and Constantine Papadakis, for
agreeing to serve on the Board of Directors for 2001.
Executive Officers and Directors
Set forth below is certain information concerning the executive officers and
directors of Mace.
Name Age Position
---- --- --------
Louis D. Paolino, Jr. 44 Director, Chairman of the Board, President, and Chief
Executive Officer
Gregory M. Krzemien 41 Chief Financial Officer and Treasurer
Robert M. Kramer 48 Director, General Counsel, Executive Vice President and
Secretary
Michael G. Fazio 50 Vice President - Operations /1/
Matthew J. Paolino 36 Director, Vice President
Mark S. Alsentzer 45 Director
Jon E. Goodrich 55 Director and Vice President of Security Products Division
Richard B. Muir 45 Director
Constantine N. Papadakis, Ph.D. 54 Director
Ronald R. Pirollo 41 Chief Accounting Officer and Controller
/1/ Mr. Fazio resigned as an officer of Mace effective August 1, 2000.
11
Compensation of Certain Executive Officers
The following table sets forth the annual compensation (which consisted
solely of base salary) for the year ended December 31, 1999, of the five most
highly compensated executive officers of Mace.
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------
Name and Principal Position Year Salary
- ---------------------------- ---- --------
Louis D. Paolino, Jr. 1999 $201,565
President and Chief
Executive Officer
Jon E. Goodrich (1) 1999 $124,219
Vice President 1998 $123,714
1997 $124,214
Michael Fazio (2) (3) 1999 $ 67,307
Vice President
Robert M. Kramer (2) 1999 $ 76,952
Executive Vice President
and General Counsel
Gregory M. Krzemien (2) 1999 $ 67,722
Chief Financial Officer
and Treasurer
- ------------------
(1) Jon Goodrich served as President and Chief Executive Officer until January
15, 1996 and served as an advisor to the Board for the remainder of 1996.
Jon Goodrich was re-appointed as President and Chief Executive Officer on
March 14, 1997, until July 1, 1999, when Mr. Goodrich was replaced by Mr.
Paolino. Mr. Goodrich currently serves as Vice President of Mace's
Security Products Division.
(2) The amounts indicated for Messrs. Fazio, Kramer and Krzemien are listed
because their annual salaries are $100,000 or more. The 1999 salary
amounts indicated reflect the fact that they were not employed by Mace for
the entire year.
(3) Mr. Fazio resigned as an officer of Mace effective August 1, 2000.
Employment Agreements
Louis D. Paolino, Jr., Employment Agreement
Mace currently employs Louis D. 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 D. Paolino, Jr., as
compensation for his services to Mace, under his employment agreement or
otherwise. Mr. Paolino, however, holds warrants to acquire 1,136,364 shares of
Mace common stock that he acquired in connection with the change of control
transactions described later in this proxy statement in the section, see
Additional Information - Acquisition of Control of Mace.
12
Ronald Pirollo Employment Agreement
Mace currently employs Ronald Pirollo as its Controller under the terms of a
four-year employment agreement. Mr. Pirollo is currently paid an annual salary
of $110,000, is provided certain medical and other employee benefits, was
granted options to purchase 50,000 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 or in the event Mr. Pirollo's employment is terminated without cause, in
which case such options vest immediately) and is prohibited against competing
with Mace during employment and for a six month period following a termination
of employment.
Other Executive Employment Agreements
Mace currently employs Robert M. Kramer, Matthew Paolino, 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
Matthew J. Paolino Vice President $ 45,000 125,000
13
Biographical Information for Non-Director Executive Officers
Set forth below is certain biographical information about the executive
officers of Mace who are not nominees to the Board:
Gregory M. Krzemien
- -------------------
Age: 41
Principal Occupation:
May 24, 1999-Present Chief Financial Officer and Treasurer of Mace
Recent Business Experience:
August 1992-December 1998 Chief Financial Officer and Treasurer of Eastern
Environmental Services, Inc.
Ronald R. Pirollo
- -----------------
Age: 41
Principal Occupation:
July 1, 1999-Present Controller of Mace
Recent Business Experience:
July 1997-December 1998 Controller of Eastern Environmental Services, Inc
1987-June 1997 Vice President - Finance of Envirite Corporation
Michael Fazio
- -------------
Age: 50
Principal Occupation:
July 1, 1999-August 1, 2000 Vice President of Operations of Mace (1)
Recent Business Experience:
1997-December 1998 President of Wash Depot (a car wash services
company)
Prior to 1997 President of Fazio Enterprises (a car services
company)
(1) Mr. Fazio resigned as an officer of Mace effective August 1, 2000.
Section 16(a) Beneficial Ownership Reporting Compliance
Based on Mace's records and other information, Mace believes that all
filing requirements with the Securities and Exchange Commission applicable to
its directors and executive officers were complied with for 1999.
14
THE PRINCIPAL STOCKHOLDERS OF MACE
The following beneficial ownership table sets forth information as of September
30, 2000, regarding beneficial ownership of shares of Mace common stock by the
following persons:
. 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;
. each director and director-nominee of Mace; and
. all directors and executive officers of Mace as a group.
Unless otherwise indicated, to Mace's 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 September 30, 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.
Name and Address of Shares of Common Percentage of
Beneficial Owner Stock Owned Common Stock Owned (1)
- ---------------- ----------------- -----------------------
Louis D. Paolino, Jr. 6,446,030 (2) 24.5%
1000 Crawford Place, Suite 400
Mt. Laurel, NJ 08054
Excel Legacy Corporation 3,812,500 (3) 15.1
16955 Via Del Campo
San Diego, CA 92127
Mark S. Alsentzer 1,100,000 (4) 4.4
2300 Glades Road, Suite 440W
Boca Raton, FL 33431
Jon E. Goodrich 854,049 (5) 3.4
160 Benmont Ave.
Bennington, VT 05201
Matthew J. Paolino 423,473 (6) 1.7
Robert M. Kramer 251,859 (7) 1.0
Constantine N. Papadakis, Ph.D. 40,000 (8) *
Richard B. Muir -- --
All current directors and executive 9,271,134 (9) 34.8
officers as a group (9 persons)
* Less than 1% of the outstanding shares of Mace common stock.
(1) Percentage calculation is based on 25,180,373 shares outstanding on
September 30, 2000.
(2) Includes (i) warrants to acquire 1,136,364 shares and (ii) 1,162,750 shares
for which Louis D. Paolino, Jr., has been granted irrevocable proxies to
vote such shares. See "Irrevocable Proxies Granted to Louis D. Paolino,
Jr." below.
15
(3) 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.
(4) Includes warrants to purchase 50,000 shares.
(5) Includes 15,500 shares held by Jon Goodrich's wife. Jon Goodrich disclaims
beneficial ownership of the shares owned by his wife.
(6) Includes options to purchase 29,264 shares.
(7) Includes (i) warrants to acquire 75,000 shares and (ii) options to purchase
37,210 shares.
(8) Represents options to purchase 40,000 shares.
(9) See Notes 2, 4, 5, 6, 7, and 8. Also includes (i) 60,500 shares and (ii)
options to purchase 95,223 shares held by two executive officers or
directors who are not listed in the table.
Irrevocable Proxies Granted to Louis D. Paolino, Jr.
The following stockholders have granted to Louis D. Paolino, Jr., irrevocable
proxies for the sole power to vote, but not to dispose of, the 1,162,750
aggregate shares of Mace common stock owned by such stockholders until the
expiration date of such proxies:
Stockholder Shares Expiration Date of Proxies
- ----------- ------ --------------------------
D. Nagelberg & B. Nagelberg, Trustees of 581,375 10-18-03
Nagelberg family trust
Joyce Heller 236,000 10-18-03
Ronald I. Heller IRA 345,375 10-18-03
---------
Total: 1,162,750
=========
16
ADDITIONAL INFORMATION
Certain Relationships and Related Party 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.
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 D. 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:
. Louis D. 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;
. Robert M. Kramer purchased 50,000 shares of Mace common stock directly
from Mr. Goodrich for $1.375 per share; and
. Ten individuals designated by Louis D. 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 D. Paolino, Jr., with and into a
wholly-owned subsidiary of Mace pursuant to a merger agreement entered into on
March 26, 1999. The merger was completed on July 1, 1999. Louis D. Paolino,
Jr., and Red Mountain Holdings, Ltd., American Wash's other stockholder,
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 D. Paolino,
Jr., received 470,000 shares and Red Mountain received 158,362 shares. Louis D.
Paolino, Jr., and Robert Kramer received the following additional consideration
in connection with this merger:
. Louis D. Paolino, Jr., received a warrant to purchase 1,500,000 shares
of Mace common stock at a purchase price of $1.375 per share;
. Louis D. 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
. Robert Kramer received a warrant to purchase 75,000 shares of Mace
common stock at a purchase price of $1.375 per share.
17
Mace's board of directors and management team were restructured in connection
with these transactions. Louis D. Paolino, Jr., was appointed as Mace's
Chairman, President and Chief Executive Officer. The entire board of directors,
other than Mr. Goodrich, resigned and was replaced by Louis D. Paolino, Jr.,
Robert Kramer, Constantine Papadakis, Matthew Paolino and Rodney Proto and the
board 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 arrangement with
Bluepointe, Inc., a corporation controlled by Louis D. Paolino, Jr., Mace's
Chairman, President and Chief Executive Officer, for Mace's executive offices in
Mt. Laurel, New Jersey. The lease arrangement provided for monthly rental
payments of $10,000. This monthly lease payment was considered to be more
favorable than could be obtained on the open market for similar facilities.
Effective August 1, 2000, after a survey of local real estate market pricing and
upon the approval of the Audit Committee, Mace entered into a five year lease
with Bluepointe which provides for an initial monthly rental payment of $15,962,
which increases by 5% per year in the succeeding years of the lease. Mace
believes that the terms of this lease (based on an annual rate of $19.00 per
square foot ) 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 the fiscal year ended December 31, 1999, and
$145,000 through September 30, 2000. Mace does not anticipate paying such
corporation more than $10,000 for the remainder of this fiscal year.
Mace purchased car wash parts, equipment and related services from Sonny's
Enterprises, Inc., a car wash parts and equipment company owned by Paul G.
Fazio, the brother of Michael Fazio, Mace's former Vice President - Operations,
totaling $391,000 in fiscal year 1999 and $501,000 through September 30, 2000.
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.
Mace purchased charter airline services from Air Eastern, a charter airline
company owned by Louis D. Paolino, Jr., Mace's Chairman of the Board, Chief
Executive Officer and President, totaling $50,000 in fiscal 1999 and $84,000
through September 30, 2000. Mace believes that the rates charged are
competitive when compared with similar services provided by independent airline
charter companies.
In February 2000, Mace entered into a Management Agreement with Mark Sport,
Inc., a Vermont corporation. Mark Sport is controlled by Jon E. Goodrich, a
director of the Company. The Management Agreement entitles Mark Sport to
operate Mace's Safety and Security Devices Division and receive all profits or
losses for a seven-month term beginning January 1, 2000. The Agreement was
extended for a six month period through January 31, 2001, as provided for in the
original Management Agreement. In exchange, the Agreement requires Mark Sport
to pay the Company $20,000 per month beginning February 2000 and continuing
through the term of the Management Agreement as extended. Additionally, Mark
Sport must pay the Company an amount equal to the amortization and depreciation
on the assets of the division at the end of the term of the agreement. During
the term of the Agreement, Mark Sport must operate the division in substantially
the same manner as it has been operated prior to the Management Agreement.
Mace's Safety and Security division leases manufacturing and office space under
a five-year lease with Vermont Mill Properties, Inc. ("Vermont Mill"), which
provides for monthly lease payments of $6,667 beginning November 15, 1999.
Vermont Mill is also controlled by Jon E. Goodrich.
18
Deadline For Stockholder Proposals
July 1, 2001, is the deadline for stockholders to submit proposals pursuant to
Rule 14a-8 of the Exchange Act for inclusion in Mace's proxy statement for
Mace's 2001 Annual Meeting of Stockholders. A notice of a stockholder proposal
submitted outside of the processes of Rule 14a-8 of the Exchange Act is
considered untimely after September 6, 2001, and Mace's proxy for the 2001
Annual Meeting of Stockholders may confer discretionary authority to vote on
such matter without any discussion of such matter in the proxy statement for
such meeting.
Mace's Annual Report
A copy of Mace's 1999 Annual Report to Stockholders (including its Annual Report
on Form 10-KSB, with financial statements and schedules, but excluding exhibits)
accompanies this proxy statement, but it is not to be regarded as proxy
solicitation material. Upon request and with the payment of a reasonable fee,
Mace will furnish to record and beneficial holders of its common stock copies of
exhibits to the Form 10-KSB. Direct all requests for copies of the above
materials to Eduardo Nieves, Jr., Investor Relations, at the offices of Mace set
forth on page 1 of this proxy statement.
By Order of the Board of Directors,
Mt. Laurel, New Jersey Robert M. Kramer
November 7, 2000 Secretary
19
APPENDIX A
----------
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
MACE SECURITY INTERNATIONAL, INC.
MACE SECURITY INTERNATIONAL, INC., a corporation organized and existing
under and by virtue of the Delaware General Corporation Law (the "Corporation")
DOES HEREBY CERTIFY THAT:
FIRST: The name of the Corporation is "Mace Security International,
Inc."
SECOND: The Amended and Restated Certificate of Incorporation was filed
by the Secretary of State on December 28, 1999.
THIRD: The Amended and Restated Certificate of Incorporation is hereby
amended to provide for a decrease in the number of authorized
shares of Common Stock, par value $.01 per share, from
200,000,000 to 50,000,000, and for a decrease in the number of
authorized shares of Preferred Stock, par value $.01 per share,
from 50,000,000 to 10,000,000.
FOURTH: To accomplish the foregoing amendment, the first sentence of
Article FOURTH of the Amended and Restated Certificate of
Incorporation is hereby amended to read as follows:
The total number of shares of capital stock which the corporation
shall have authority to issue is Fifty Million (50,000,000)
shares of common stock, par value $.01 per share (the "Common
Stock"), and Ten Million (10,000,000) shares of preferred stock,
par value $.01 per share (the "Preferred Stock").
FIFTH: The foregoing amendment was adopted by the directors and
shareholders of the Corporation at duly called meetings of the
board and shareholders, respectively, in accordance with the
provisions of Section 242 of the Delaware General Corporation
Law.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment of Amended and Restated Certificate of Incorporation to be executed by
a duly authorized officer of the Corporation this ___th day of December, 2000.
Mace Security International, Inc.
_________________________________
Louis D. Paolino, Jr., President
A-1
MACE SECURITY INTERNATIONAL, INC.
1000 CRAWFORD PLACE, SUITE 400
MT. LAUREL, NEW JERSEY 08054
PROXY - Annual Meeting of Stockholders - December 12, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Eduardo Nieves, Jr., and Gregory M.
Krzemien severally as proxies, each with the power to appoint his
substitute, and hereby authorizes either or both of them to represent and
to vote, as designated on the reverse side hereof, all the shares of common
stock of Mace Security International, Inc. ("Mace") held of record by the
undersigned on November 2, 2000, at the Annual Meeting of Stockholders to
be held on December 12, 2000, or at any adjournment or postponement
thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL NOMINEES LISTED FOR ELECTION OF DIRECTORS UNDER
PROPOSAL 1; IN FAVOR OF PROPOSAL 2; IN FAVOR OF PROPOSAL 3; AND IN
ACCORDANCE WITH THE PROXIES' JUDGEMENT UPON OTHER MATTERS PROPERLY COMING
BEFORE THE MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
(Continued, and to be signed, on Reverse Side)
________________________________________________________________________________
[X] Please mark
your vote
as in this example
FOR all nominees WITHHOLD
listed (except as AUTHORITY
marked to the To vote for all nominees
contrary below) listed at right Nominees:
Louis D. Paolino Jr.
1. ELECTION OF Mark S. Alsentzer
DIRECTORS [_] [_] Jon E. Goodrich
Robert M. Kramer
Richard B. Muir
Matthew J. Paolino
Constantine N. Papadakis
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
the nominee's name below)
______________________________
FOR AGAINST ABSTAIN
2. Approval and adoption of an amendment
to Mace's Amended and Restated Certificate [_] [_] [_]
of Incorporation to decrease the number of
authorized shares of Common Stock from
200,000,000 to 50,000,000 and decrease the
number of authorized shares of Preferred
Stock from 50,000,000 to 10,000,000.
3. Ratification of the Board's appointment of
Grant Thornton LLP as Mace's independent auditors [_] [_] [_]
for fiscal year ending December 31, 2000.
In their discretion, the Proxies are authorized, to the extent permitted by the
rules of the Securities and Exchange Commission, to vote upon such other
business as may properly come before the meeting or any adjournment or
postponement thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
SIGNATURE ___________________________ DATE______________ SIGNATURE _______________________ DATE______________
NOTE: Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign with full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.