def14a
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
Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to Section
240.14a-11(c) or Section 240.14a-12
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Mace Security International, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11
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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
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Fee paid previously by written preliminary
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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.
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Amount Previously
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Form Schedule or
Registration Statement No.: |
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Date Filed: |
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1000 Crawford Place, Suite 400
Mt. Laurel, New Jersey 08054
(856) 778-2300 |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Date: December 8, 2006
Time: 11:00 AM, Eastern Time
Location:
Las Olas City Centre
401 East Las Olas Blvd.
Ft. Lauderdale, Florida 33301
To Mace Security International, Inc. Stockholders:
We invite you to attend our 2006 Annual Meeting of Stockholders. At this meeting, you and the
other stockholders will be able to vote on the following proposal, together with any other business
that may properly come before the meeting:
Election of five directors to the Board of Directors for one-year terms. The Board has nominated
for election Louis D. Paolino, Jr., Mark S. Alsentzer, Constantine N. Papadakis, Ph.D., Matthew
J. Paolino, and Burton Segal.
You may vote on this proposal 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 October 27, 2006 can vote at the Annual
Meeting and any adjournment or postponement of the Annual Meeting.
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By Order of the Board of Directors,
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/s/ Robert M Kramer |
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Mt. Laurel, New Jersey
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Robert M. Kramer |
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October 31, 2006
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Secretary |
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TABLE OF CONTENTS
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1000 Crawford Place, Suite 400
Mt. Laurel, New Jersey 08054
(856) 778-2300 |
PROXY STATEMENT
INTRODUCTION
The Board of Directors is soliciting proxies to be used at the 2006 Annual Meeting of Stockholders
of Mace Security International, Inc. (Mace or the Company) to be held
on Friday, December 8, 2006 at 11:00 AM, Eastern Time, at the Las Olas City Centre, 401 East Las
Olas Blvd., Ft. Lauderdale, Florida 33301. Mace will begin mailing this proxy statement and the
enclosed form of proxy on or about November 2, 2006 to its stockholders entitled to vote at the
Annual Meeting.
The Board of Directors is soliciting your proxy to encourage you to vote on the proposal at the
Annual Meeting and to obtain your support for the proposal. 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 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 you to
consider when deciding how to vote on the proposal. Please read it carefully. It is divided into
four sections following this Introduction:
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Section |
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The Proposal |
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4 |
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About the Board of Directors and Executive Officers |
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6 |
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The Principal Stockholders of Mace |
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18 |
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Additional Information |
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Mace will bear the cost for soliciting these proxies. Maces directors, officers and
employees may solicit proxies, but will receive no special compensation for any solicitation
activities. In addition to use of the mails, proxies may be solicited in person, by telephone,
facsimile or by other means. 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 Friday, December 8, 2006, at 11:00 AM,
Eastern Time, at the Las Olas City Centre, 401 East Las Olas Blvd., Ft. Lauderdale Florida, 33301.
Record Date The Board has fixed the close of business on October 27, 2006 as the record
date for the Annual Meeting. All stockholders of record at that time are entitled to notice of and
are entitled to vote in person or by proxy at the Annual Meeting.
Quorum Requirement Maces bylaws require that a majority of outstanding shares 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 there is a quorum at the Annual Meeting.
The Proposal Stockholders will vote on the election of five directors at the Annual
Meeting.
Other Matters There were no stockholder proposals submitted for the Annual 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, if other matters requiring the vote of the stockholders properly come
before the Annual Meeting, which under applicable proxy regulations need not be included in this
proxy statement, or which the Board did not know would be presented at least 45 days before this
solicitation, the persons named in the enclosed proxy will have discretionary authority to vote the
proxies held by them with respect to such matters in accordance with their best judgment on such
matters.
Presence of Independent Registered Public Accountants Representatives of Grant Thornton
LLP, Maces independent registered public accounting firm, will 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.
The Stockholders As of the record date of October 27, 2006 there were 15,275,382 shares of
Mace common stock issued and outstanding. 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 Maces
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 October 27, 2006. The presence, in person or by proxy, of the holders of a
majority of shares of common 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 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 five 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.
How To Vote Your Shares
You may vote in one of two ways:
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return your completed, signed and dated proxy card before the Annual Meeting; or |
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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 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 Robert M. Kramer will serve as your proxies for the Annual
Meeting. If you complete the entire proxy card except for the voting instructions, then the
proxies will vote your shares for the election of the nominated directors. 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 exercised at
the Annual Meeting by any of the following means:
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notifying Maces Secretary in writing (notice to be sent to Maces executive
offices, the address for which is located on the first page of this proxy statement); |
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submitting another proxy card with a later date; or |
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attending the Annual Meeting and voting by written ballot (mere attendance at the Annual
Meeting will not by itself revoke your proxy). |
Only the record owner of your shares can vote your shares or revoke a proxy the record owner has
given. If your shares are in street name, you will not be able to revoke the proxy sign given by
the street name holder.
3
THE PROPOSAL
Proposal Election of Directors
Election of five directors to the Board of Directors for one-year terms and until their respective
successors are duly elected and qualified.
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Nominees |
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Louis D. Paolino, Jr.
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Constantine N. Papadakis, Ph.D.
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Mark S. Alsentzer
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Matthew J. Paolino |
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Burton Segal
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About the Nominees
Louis D. Paolino, Jr., Mark S. Alsentzer, Constantine N. Papadakis, Ph.D., Matthew J. Paolino, and
Burton Segal currently serve on the Board of Directors. Each nominee indicated that he will serve
on the Board, if elected. Biographical information for each nominee appears below.
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Louis D. Paolino, Jr. |
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Age: |
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Director Since: |
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May 24, 1999 |
Principal Occupation: |
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May 24, 1999-Present |
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President and Chief Executive Officer of Mace |
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July 1, 1999-Present |
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Chairman of the Board of Mace |
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Recent Business Experience: |
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June 1996-December 1998 |
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Chairman of the Board, President and Chief Executive Officer of |
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Eastern Environmental Services, Inc. (a waste management company) |
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Mark S. Alsentzer |
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Age: |
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Director Since: |
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December 15, 1999 |
Principal Occupation: |
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January 2006-Present |
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Chief Executive Officer and Director of Pure Earth, Inc. |
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Recent Business Experience: |
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December 1996- October 2005 |
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Director, US Plastic Lumber Corporation (a plastic lumber and |
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recycling company) |
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December 1996- July 2004 |
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President and Chief Executive Officer of U.S. Plastic Lumber |
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Corporation (a plastic lumber and recycling company) |
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1992-December 1996 |
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Vice President of Republic Environmental System, Inc. (an environmental |
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services company) |
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Other Directorships: |
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Pure Earth, Inc. |
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Involvement in Certain Legal |
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On July 23, 2004, U.S. Plastic Lumber Corporation filed a voluntary petition |
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under Chapter 11 of the United States Bankruptcy Code.
At the time of the Chapter
11 filing, Mark S. Alsentzer, a director of Mace,
was Chairman,
President and Chief
Executive Officer of
U.S. Plastic Lumber Corporation. Mr. Alsentzer is no longer Chairman,
a director, |
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President or Chief Executive
Officer of U.S. Plastic Lumber Corporation. |
Constantine N. Papadakis, Ph.D. |
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Age: |
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Director Since: |
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May 24, 1999 |
Principal Occupation: |
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1995-Present |
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President of Drexel University |
Recent Business Experience: |
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1986-1995 |
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Dean of the College of Engineering at the University of Cincinnati |
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Other Directorships: |
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Amkor Technologies, Inc., Aqua
America, Inc., CDI, Inc., Met-Pro Corporation, The Philadelphia Stock
Exchange, Sovereign Bank, the Judicial Council of the
Supreme Court of Pennsylvania, the Opera Company of
Philadelphia.
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Matthew J. Paolino |
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Age: |
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Director Since: |
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July 1, 1999 |
Principal Occupation: |
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July 1, 1999-Present |
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Vice President of Risk Management and Asset Management of Mace |
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1994-Present |
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President of Premier Concrete, Inc. (a general contractor) |
Recent Business Experience: |
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1996-December 1998 |
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Vice President of Risk Management, Asset Management and Special Waste |
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Divisions of Eastern Environmental Services, Inc. (a waste management company) |
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Other Information: |
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Mr. Paolino is the brother of Louis D. Paolino, Jr.,
Maces Chairman of the Board, President and
Chief Executive Officer
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Burton Segal |
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Director Since: |
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October 22, 2003 |
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Principal Occupation: |
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1973-Present |
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Principal in the accounting firm of Segal, Brint & Company, LLC, Certified |
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Public Accountants |
The Board of Directors recommends that you vote FOR the election of Louis D. Paolino, Jr., Mark S.
Alsentzer, Constantine N. Papadakis, Ph.D., Matthew J. Paolino, and Burton Segal to Maces
Board.
5
ABOUT THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
About the Board and its Committees
Maces Board is currently comprised of five directors: Louis D. Paolino, Jr., Mark S.
Alsentzer, Constantine N. Papadakis, Ph.D., Matthew J. Paolino, and Burton Segal. Each director
position is elected annually for a one-year term.
Mace has Corporate Governance Guidelines, which were adopted by the Board and provide that a
majority of the Companys directors should be independent, as established by the rules of the
NASDAQ Global Market, and set forth other corporate governance requirements. The Board has
determined that Messrs. Segal and Alsentzer and Dr. Papadakis are independent under these rules. In
addition, all of the Audit Committee members are independent under the Audit Committee independence
standards established by the NASDAQ Global Market and the rules promulgated by the SEC. The Board
has an Audit Committee, a Compensation Committee, a Nominating Committee and an Ethics and
Corporate Governance Committee. All of the committees of the Board are governed by a charter and
such charters, along with the Companys Corporate Governance Guidelines, are posted on the
Companys website at www.mace.com. In addition, the Audit Committee Charter was included as
Appendix B to our definitive 2003 Proxy Statement filed with the SEC on November 18, 2003.
Maces Board held six formal meetings, including four meetings of the independent directors,
during 2005. During 2005, all directors attended at least 86% of the aggregate of Maces
Board meetings and the meetings of the committees of the Board on which they served. All members of
the Audit Committee, Compensation Committee, Nominating Committee, and the Ethics and Corporate
Governance Committee are independent directors within the meaning of the rules of the NASDAQ
Global Market. In addition to meeting as members of committees, the independent directors held
formal meetings in 2005 as independent directors. The Board has determined that Burton Segal is an
Audit Committee financial expert as defined in the rules and regulations of the SEC and is
financially sophisticated for the purposes of the rules of the NASDAQ Global Market.
The following chart describes the composition and functions of the Board committees.
BOARD COMMITTEES
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Selection of independent registered public accounting
firm. |
Audit
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Burton Segal*
Mark S. Alsentzer
Constantine N. Papadakis, Ph.D.
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Confers with independent registered public accounting
firm and internal personnel on the scope of registered public
accounting firmexaminations. |
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Reviews internal controls and procedures. |
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Reviews related party transactions. |
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Compensation
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Burton Segal |
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Annually reviews CEO compensation and performance. |
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Mark S. Alsentzer |
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Annually establishes goals for CEO. |
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Constantine N. Papadakis,
Ph.D.* |
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Annually reviews COO and CFO compensation. |
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Annually approves compensation for CEO, COO and CFO. |
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Review and determine Director compensation. |
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Hire compensation consultants. |
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Recommends executive compensation to the Board. |
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Administers Maces Nonqualified Stock Option
Plan. |
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Administers Maces 1999 Stock Option Plan. |
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Administers director compensation. |
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Nominating |
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Burton Segal Mark S. Alsentzer* |
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Develop and recommend to the Board criteria for the
selection of new directors to the Board. |
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Constantine N. Papadakis, Ph.D. |
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Seek candidates to fill vacancies in the Board. |
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Retain and terminate a search firm to be used to
identify director candidates. |
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Recommend to the Board a process for evaluating the
performance of the Board. |
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Recommend to the Board nominees for election as
directors at the annual meeting of shareholders. |
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Recommend to the Board nominees for appointment to
committees of the Board. |
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Ethics
and Corporate
Governance
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Burton Segal*
Mark S. Alsentzer
Constantine N. Papadakis, Ph.D.
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Recommends to the Board changes to the Companys
Code of Ethics and Business Conduct, Insider Trading Policy
and Corporate Disclosure Policy. |
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Monitors employee compliance with the Code of Ethics
and Business Conduct Policy, Insider Trading Policy and
Corporate Disclosure Policy. |
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Reviews along with the Audit Committee allegations of
wrongdoing concerning directors and the Chief Executive
Officer. |
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Recommends to the Board concerning responses to
inquiries by regulatory authorities relating to the
Companys Code of Ethics and Business Conduct, Insider
Trading Policy and Corporate Disclosure Policy. |
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Designates Chairman of Committee |
Nominating Committee Policies
The Nominating Committee considers candidates for Board membership suggested by its members, other
Board members and management. The Nominating Committee has authority to retain a search firm to
assist in the identification of director candidates. In selecting nominees for director, the
Nominating Committee considers a number of factors, including, but not limited to:
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whether a candidate has demonstrated business and industry experience that is relevant to the Company, including recent
experience at the senior management level (preferably as chief executive officer or in a similar position) of a company
as large or larger that the Company; |
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the candidates ability to meet the suitability requirements of all relevant regulatory agencies; |
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the candidates ability to represent interests of the stockholders; |
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the candidates independence from management and freedom from potential conflicts of interest with the Company; |
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the candidates financial literacy, including whether the candidate will meet the audit committee membership
standards set forth in the rules of the NASDAQ Global Market; |
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whether a candidate is widely recognized for his or her reputation, integrity, judgment, skill, leadership ability,
honesty and moral values; |
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the candidates ability to work constructively with the Companys management and other directors; and |
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the candidates availability, including the number of other boards on which the candidate serves, and his or her
ability to dedicate sufficient time and energy to his or her board duties. |
During the process of considering a potential nominee, the Committee may request additional
information concerning, or an interview with, the potential nominee. Pursuant to our Corporate
Governance Guidelines, no director may be nominated to a new term if he or she would be age 70 or
older at the time of election.
The Nominating Committee will also consider recommendations by stockholders of nominees for
directors to be elected at the Companys annual meeting of stockholders, if they are received
on or before September 1 of the year of the meeting. In evaluating nominations received from
stockholders, the Committee will apply the same criteria and follow the same process used to
evaluate candidates recommended by members of the Nominating Committee. Stockholders wishing to
recommend a nominee for director are to submit such nomination in writing, along with any other
supporting materials the stockholder deems appropriate, to the Secretary of the Company at the
Companys headquarters at 1000 Crawford Place, Suite 400, Mt. Laurel, New Jersey 08054.
7
Stockholder Access Policy
Stockholders who wish to communicate with directors should do so by writing to the Companys
Secretary, Robert M. Kramer, at the Companys headquarters at 1000 Crawford Place, Suite 400,
Mt. Laurel, New Jersey 08054. The Secretary of the Company reviews all such correspondence and
regularly forwards to the Board a summary of all such correspondence and copies of all
correspondence that, in the opinion of the Secretary, deals with the functions of the Board or
Board committees or that he otherwise determines requires their attention. Directors may at any
time review all correspondence received by the Company that is addressed to members of the Board
and request copies of any such correspondence. Concerns relating to accounting, internal controls
or auditing matters will be brought to the attention of the Companys Audit Committee.
Director Attendance at Annual Meetings
The Company encourages all of its directors to attend the Companys Annual Meeting of
Stockholders. Last year, four directors attended the Companys 2005 annual meeting of
stockholders.
Director Compensation
Prior to June 30, 2004, Mace did not pay fees to directors, but paid non-employee directors
reasonable travel and out-of-pocket expenses relating to their attendance at meetings. On June 29,
2004, the Independent Directors approved a compensation package for the Independent Directors
consisting of (a) an annual fee of $4,000, prorated for partial years of service, (b) a $750 fee
for in-person attendance at each Board meeting, and (c) a $300 fee for in-person attendance at each
committee meeting. On October 6, 2005, the Independent Directors approved an update to the
Independent Directors compensation consisting of an annual fee of $10,000 for 2006 services,
prorated for partial years of service, and a $1,000 per day meeting fee for physical attendance at
Board of Director and related Committee meetings.
On October 31, 2005, Maces directors, Louis D. Paolino, Jr., Matthew J. Paolino, Mark S.
Alsentzer, Burton Segal, and Constantine N. Papadakis, Ph.D., were each granted options to purchase
15,000 shares of Mace common stock at $2.64 per share for their service on the Board of Directors
in 2005.
All of the above grants were made under the 1999 Stock Option Plan.
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.
|
|
|
50 |
|
|
Chairman of the Board, President, and Chief Executive Officer |
Robert M. Kramer
|
|
|
54 |
|
|
Executive Vice President, General Counsel, and Secretary |
Gregory M. Krzemien
|
|
|
47 |
|
|
Chief Financial Officer and Treasurer |
Ronald R. Pirollo
|
|
|
47 |
|
|
Chief Accounting Officer, Vice President and Corporate
Controller |
Matthew J. Paolino
|
|
|
42 |
|
|
Director and Vice President |
Mark S. Alsentzer
|
|
|
51 |
|
|
Director |
Burton Segal
|
|
|
63 |
|
|
Director |
Constantine N.
Papadakis, Ph.D.
|
|
|
60 |
|
|
Director |
Compensation of Certain Executive Officers
The following table provides summary information concerning cash and certain other compensation
paid or accrued by Mace to or on behalf of Maces Chief Executive Officer and each of the
other most highly compensated executive officers of Mace whose compensation exceeded $100,000 (the
Named Executive Officers) for the three years ended December 31, 2005.
8
SUMMARY COMPENSATION TABLE(1)
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards |
|
|
Fiscal Year |
|
|
|
|
|
|
|
|
|
Securities |
NAME AND |
|
ended |
|
Annual Compensation |
|
Underlying |
PRINCIPAL POSITIONS |
|
December 31, |
|
Salary |
|
Bonus |
|
Options |
Louis D. Paolino, Jr. |
|
|
2005 |
|
|
$ |
400,000 |
|
|
|
|
|
|
|
15,000 |
|
Chairman of the Board, |
|
|
2004 |
|
|
$ |
400,000 |
|
|
$ |
200,000 |
|
|
|
732,182 |
|
President and Chief |
|
|
2003 |
|
|
$ |
346,769 |
|
|
|
|
|
|
|
150,000 |
|
Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert M. Kramer |
|
|
2005 |
|
|
$ |
210,000 |
|
|
|
|
|
|
|
|
|
Executive Vice President, |
|
|
2004 |
|
|
$ |
163,438 |
|
|
|
|
|
|
|
112,500 |
|
Chief Operating Officer of the |
|
|
2003 |
|
|
$ |
155,692 |
|
|
|
|
|
|
|
150,000 |
|
Car and Truck Wash Segment,
General Counsel and
Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory M. Krzemien |
|
|
2005 |
|
|
$ |
200,000 |
|
|
|
|
|
|
|
|
|
Chief Financial Officer |
|
|
2004 |
|
|
$ |
144,485 |
|
|
|
|
|
|
|
50,000 |
|
and Treasurer |
|
|
2003 |
|
|
$ |
135,492 |
|
|
|
|
|
|
|
150,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald R. Pirollo |
|
|
2005 |
|
|
$ |
164,123 |
|
|
|
|
|
|
|
|
|
Chief Accounting Officer |
|
|
2004 |
|
|
$ |
130,137 |
|
|
|
|
|
|
|
25,000 |
|
and Corporate Controller |
|
|
2003 |
|
|
$ |
118,427 |
|
|
|
|
|
|
|
100,000 |
|
|
|
|
(1) |
|
The columns captioned Annual Compensation Other Annual Compensation,
Long-Term Compensation Restricted Stock Awards, Long-Term
Compensation-LTIP Payouts, and All Other Compensation have been omitted because
none of the Named Executive Officers received other annual compensation except for Mr. Paolino
who receives a car at a lease cost of $1,500 per month. Additionally, the Company paid legal
fees in 2004 to Mr. Paolinos attorney of approximately $38,800 which were incurred in
connection with Mr. Paolinos obligation to file Forms 4 and Schedules D in connection
with his ownership of the Companys common stock. During the Companys fiscal
year ended December 31, 2005 and the first nine months ending September 30, 2006, Louis D.
Paolino, Jr. purchased approximately $44,500 and $40,800, respectively of the Companys
products at a discount from the prices charged to distributors. The total of the discount
given to Mr. Paolino in the Companys fiscal year ended December 31, 2005 and the first
nine months ending September 30, 2006 was approximately $18,200 and $5,200, respectively. The
Company (i) granted no restricted stock awards, and (ii) maintained no long-term incentive
plan for any of the Named Executive Officers, in each case during the three fiscal years
ended December 31, 2005. Additionally, the Company has not issued any stock appreciation
rights (SARs) in any of the past three years. |
Equity Compensation Plan Information
Stock options are issued under the 1999 Stock Option Plan at the discretion of the Compensation
Committee to employees at an exercise price of no less than the then current market price of the
common stock and generally expire ten years from the date of grant. Allocation of available
options and vesting schedules are at the discretion of the Compensation Committee and are
determined by potential contribution to, or impact upon, the overall performance of the Company by
the executives and employees. Stock options are also issued to members of the Board of Directors
at the discretion of the Compensation Committee. These options may have similar terms as those issued to
officers or may vest immediately. The purpose of the 1999 Stock Option Plan, which has been
approved by the stockholders of the Company, is to provide a means of performance-based
compensation in order to provide incentive for the Companys employees. Warrants have been
issued in connection with the sale of the shares of the Companys stock, the purchase and
sale of certain businesses and to a director. The terms of the warrants have been established by
the Board of Directors of the Company. Certain of the warrants have been approved by stockholders.
9
The following table sets forth certain information regarding the Companys Stock Option Plan
and warrants as of December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
|
|
|
|
|
|
|
|
|
Number of securities |
|
|
(a) |
|
(b) |
|
remaining available for |
|
|
Number of securities to |
|
Weighted average |
|
future issuance under |
|
|
be issued upon exercise |
|
exercise price of |
|
equity compensation plans |
|
|
of outstanding options, |
|
outstanding options, |
|
(excluding securities |
Plan Category |
|
warrants and rights |
|
warrants and rights |
|
reflected in column (a)) |
Equity
compensation plans
approved by
stockholders |
|
|
3,108,682 |
|
|
$ |
4.00 |
|
|
|
3,984,382 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation
plans not approved
by stockholders |
|
|
433,000 |
|
|
$ |
8.02 |
|
|
|
N/A |
|
Option Grants in Last Fiscal Year
The following table sets forth certain information concerning individual grants of stock options to
the Named Executive Officers during the fiscal year ended December 31, 2005.
OPTION GRANTS IN LAST FISCAL YEAR (1)
(Individual Grants)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Total |
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Options |
|
|
|
|
|
|
|
|
|
Potential Realizable |
|
|
Securities |
|
Granted to |
|
|
|
|
|
|
|
|
|
Value at Assumed |
|
|
Underlying |
|
Employees |
|
Exercise |
|
|
|
|
|
Rates of Stock Price |
|
|
Options |
|
in Fiscal |
|
Price Per |
|
Expiration |
|
Appreciation for |
Name |
|
Granted (#) |
|
Year (1) |
|
Share($) |
|
Date |
|
Option Term |
|
|
|
|
|
|
|
|
|
|
5% |
|
10% |
Louis D. Paolino,
Jr. |
|
|
15,000 |
|
|
|
5.0 |
% |
|
$ |
2.64 |
|
|
|
10/31/15 |
|
|
$ |
24,900 |
|
|
$ |
63,150 |
|
|
|
|
(1) |
|
The Company granted options to employees and directors to purchase a total 300,000 shares
of common stock during the fiscal year ended December 31, 2005. All of these grants were made
at exercise prices equal to the fair market value of the common stock at the date of grant. |
Aggregated Option Exercises in Last Fiscal Year
The following table sets forth certain information regarding stock options held by the Named
Executive Officers during the fiscal year ended December 31, 2005, including the number and
value of exercisable and unexercisable stock options as of December 31, 2005. No options were
exercised by any of the Named Executive Officers during the fiscal year ended December 31,
2005. In-the-money options are those for which the fair market value of the underlying
securities exceeds the exercise price of the option. The closing transaction price of the
Companys common stock on December 31, 2005 was $2.47 per share.
10
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Unexercised |
|
|
Number of Securities |
|
In-the-money |
|
|
Underlying Unexercised Options/SARs |
|
Options/SARs at Fiscal Year End |
|
|
at Fiscal Year End 2005 |
|
2005 |
Name |
|
Exercisable |
|
Unexercisable |
|
Exercisable |
|
Unexercisable |
Louis D. Paolino, Jr. |
|
|
989,682 |
|
|
|
|
|
|
$ |
182,215 |
|
|
$ |
|
|
Gregory M. Krzemien |
|
|
350,000 |
|
|
|
|
|
|
$ |
231,375 |
|
|
$ |
|
|
Robert M. Kramer |
|
|
455,000 |
|
|
|
|
|
|
$ |
231,375 |
|
|
$ |
|
|
Ronald R. Pirollo |
|
|
200,000 |
|
|
|
|
|
|
$ |
112,500 |
|
|
$ |
|
|
Employment Agreements
Louis D. Paolino, Jr., Employment Agreement
Mace currently employs Louis D. Paolino, Jr., as its President and Chief Executive Officer under a
three-year employment agreement dated August 21, 2006. The Company obtained a Compensation
Study from a third party consulting firm prior to entering into the Employment Agreement. The
principal terms of the employment agreement, which expire on August 21, 2009, include:
(i) |
|
an annual salary of $450,000; |
|
(ii) |
|
three separate option grants for common stock under Maces 1999 Stock Option Plan at an
exercise price equal to the close of market on the date of grant. The first grant issued on
August 21, 2006 was an option exercisable into 450,000 shares of common stock, the second
option grant (Second Grant) is to be awarded within five days of the first
yearly anniversary date of the employment agreement and the third option grant (Third
Grant) is to be awarded within the five days of the second yearly anniversary date of
the employment agreement. The amount of shares of the Second Grant and Third Grant
(Option Shares) shall be exercisable into is to be determined by the
Companys Compensation Committee, based on a then current compensation study of the
Chief Executive Officer position. The amount of Option Shares, at time of grant, plus $450,000
annual compensation paid to Mr. Paolino equals no less then the market consensus total
direct compensation, amount paid by the comparable companies to their chief executive
officers, as set forth in the compensation study to be obtained by the Compensation Committee.
The options with respect to each of the grants shall be fully vested on the date of the grant; |
|
(iii) |
|
a bonus of (a) one percent (1%) of the sales price of any car washes sold (excepting only
two car washes, one of which has been sold as of the date of this Proxy); and (b) three
percent (3%) of the purchase or sales price of any other business sold or purchased, the three
percent (3%) amount to be reduced by the amount of any fee paid to an investment banker hired
by the Company where the investment banker located the transaction and conducted all
negotiations, and no deduction will be made for a fee paid to any investment banker for a
fairness opinion or other valuation; |
|
(iv) |
|
a payment of 2.99 times Mr. Paolinos average total compensation (base salary plus any
bonuses plus the value of any option award, valued using the Black Scholes method) over the
past five years, upon termination of employment under certain conditions or upon a change in
control. If Mr. Paolino receives the change of control bonus, his employment agreement can
then be terminated without an additional payment; |
|
(v) |
|
provision for Company standard medical and other employee benefits;
|
|
(vi) |
|
a car at a lease cost of $1,500 per month; and |
|
(vii) |
|
prohibition against competing with the Company during employment and for a three-month
period following a termination of employment. |
11
Other Executive Employment Agreements
The primary terms of the employment agreements for Robert M. Kramer, Gregory M. Krzemien, and
Ronald R. Pirollo expired on March 26, 2003. Messrs. Kramer and Krzemien are working on a
month-to-month, at-will basis under the provisions of their employment agreements. Mr.
Pirollo or the Company may terminate Mr. Pirollos employment at any time. The table
below discloses the current salary for these executive officers.
|
|
|
|
|
|
|
|
|
|
|
Current |
Name |
|
Office |
|
Annual Salary |
Robert M. Kramer |
|
Chief Operating Officer of the Car |
|
$ |
210,000 |
|
|
|
and Truck Wash Segment,Executive |
|
|
|
|
|
|
Vice President, General Counsel |
|
|
|
|
|
|
and Secretary |
|
|
|
|
|
|
|
|
|
|
|
Gregory M. Krzemien |
|
Chief Financial Officer |
|
$ |
200,000 |
|
|
|
and Treasurer |
|
|
|
|
|
|
|
|
|
|
|
Ronald R. Pirollo |
|
Chief Accounting Officer |
|
$ |
160,000 |
|
|
|
and Corporate Controller |
|
|
|
|
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:
|
|
|
Robert M. Kramer |
|
|
Age: |
|
54 |
Principal Occupation: |
|
|
May 24, 1999-Present |
|
Executive Vice President, General Counsel and Secretary of Mace |
|
|
|
Recent Business Experience: |
|
|
1989-August 2000 |
|
Sole shareholder of Robert M. Kramer & Associates, P.C. |
June 1996-December 1998 |
|
Executive Vice President, General Counsel, and Secretary of Eastern |
|
|
Environmental Services, Inc. (a waste management company) |
|
|
|
Gregory M. Krzemien |
|
|
Age: |
|
47 |
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: |
|
47 |
Principal Occupation: |
|
|
July 1, 1999-Present |
|
Chief Accounting Officer, Vice President and Controller of Mace |
Recent Business Experience: |
|
|
July 1997-December 1998 |
|
Controller of Eastern Environmental Services, Inc. |
12
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires Maces directors and executive officers, as well
as persons beneficially owning more than 10% of Maces outstanding shares of common
stock and certain other holders of such shares (collectively, Covered Persons),
to file with the Commission and the Nasdaq Stock Market (the Nasdaq), within
specified time periods, initial reports of ownership, and subsequent reports of changes in
ownership, of common stock and other equity securities of Mace. Based upon Maces review
of copies of such reports furnished to it and upon representations of Covered Persons that no
other reports were required, to Maces knowledge, all of the Section 16(a) filings
required to be made by the Covered Persons with respect to 2005 were made on a timely basis.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Companys Board of Directors consisted of directors
Burton Segal, Mark Alsentzer, and Constantine N. Papadakis, Ph.D. No executive officer of
Mace served as a director or compensation committee member of any entity of which Messrs.
Segal, Alsentzer or Papadakis was an executive officer or director.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Companys Board of Directors consists of directors Burton
Segal, Mark Alentzer, and Constantine N. Papadakis, Ph.D, all of whom the Board has determined
are independent pursuant to the NASDs Nasdaq Global Market Marketplace Rules. This
report shall not be deemed incorporated by reference into any filing under the Securities Act
of 1933, as amended (the Securities Act), or the Securities Exchange Act of
1934, as amended (the Exchange Act), by virtue of any general statement in such
filing incorporating this Form 10-K by reference, except to the extent that the Company
specifically incorporates the information contained in this section by reference, and shall
not otherwise be deemed filed under either the Securities Act or the Exchange Act.
General. The Committee is responsible for matters related to compensation, including compensation
policy and the review and approval, or recommendation to the Board for approval, of salaries,
bonus and other compensation of the Companys officers. The Companys compensation
policies for executives are intended to further the interests of the Company and its
stockholders by encouraging growth of its business through securing, retaining, and motivating
management employees of high caliber who possess the skills necessary for the development and
growth of the Company.
Components of Executive Compensation
The Companys current compensation package consists of three components: base salaries,
bonuses and stock options. Together, these elements comprise total compensation value. In
determining specific levels of compensation for the Companys executives, the Committee
considers the achievement of corporate and individual goals, financial performance of the
Company, recommendations of management and benchmarks provided by comparative data of peer
companies. The Committee seeks to ensure that the appropriate relationship exists between
executive compensation and corporate performance. In addition, the total compensation paid to
the Companys executive officers is influenced significantly by the need (i) to attract
management employees with a high level of expertise, and (ii) to motivate and retain key
executives for the long-term success of the Company and its stockholders.
Base Compensation. In setting and adjusting base salary levels for each individual executive, the
Compensation Committee considers factors such as the executives scope of
responsibility, the executives performance, the performance of the Company, future
potential and benchmarks of comparable positions at other companies. In making salary
decisions, the Compensation Committee exercises subjective judgment using no specific weights
for the previously discussed factors. In setting 2004 base salaries of executives other than
the Chief Executive Officer, the Committee has attempted to keep base salaries as low as
possible while still retaining its executives. Comparative data provided by Amper, Politziner
and Mattia, P.C. reflects that base cash compensation levels are near the 25th
percentile of peer companies surveyed for Mr. Kramer, Mr. Krzemien and Mr. Pirollo. Peer
companies included companies providing consumer services on a national basis. For 2005, the
Committee maintained the same annual base salary levels for its executives as in 2004. In
reviewing the base salaries of the Companys executive officers for 2005, the Committee
considered the individual performance of each executive, the Companys financial
performance in 2005, managements efforts to maximize operating profits from its Car and
Truck Wash Segment, the Companys goal to sell its car and truck washes, the continuing
growth of its Security Segment, and keeping the Companys overhead as low as possible.
13
Stock Options. The Company grants stock options to its executive management under its 1999
employee stock option plan. Option grants are intended to offer significant returns if the
Company is successful and, therefore, create significant incentives to devote the effort
called for in order to implement the Companys strategic plan. The Compensation
Committee believes that executives interests are directly tied to enhanced stockholder
value. Thus, stock options are used to provide the executive management team with a strong
incentive to perform in a manner that should result in the long-term success of the Company.
The Compensation Committee authorized and granted stock options for Mr. Kramer, Mr. Krzemien
and Mr. Pirollo on March 1, 2006 as incentive compensation for their 2005 performance in the
respective amounts of 75,000, 60,000 and 25,000. All awarded options had an exercise price of
$2.40, the close of market on March 1, 2006. The options were issued on March 23, 2006. The
options awarded to the Executive Officers vest one third upon issuance, one third twelve
months from issuance and one third twenty-four months from issuance.
Performance Bonuses. The Company maintains the option to supplement base compensation with awards
of performance bonuses in the form of cash to reward efforts undertaken by its key executive
officers which are extraordinary in nature. No discretionary bonuses were paid to executive
officers for 2005.
Compensation of the Chief Executive Officer
The compensation of Louis D. Paolino, Jr., the Chief Executive Officer, for 2005 was primarily
made up of base salary and stock options. Mr. Paolinos base salary was set at $400,000
in the employment agreement he entered into with the Company in August 2003. As discussed
above, in 2004, the Committee reviewed comparative data provided by Amper, Politziner and
Mattia, P.C. and determined that Mr., Paolinos base salary was near the median of the
peer companies surveyed. Mr. Paolinos salary was not adjusted in 2004 or 2005. In
addition, Mr. Paolino received 15,000 stock options in 2005 for his service on the Board of
Directors. The Compensation Committee authorized Mr. Paolino to receive 150,000 stock options
at an exercise price of $2.40 on March 1, 2006 for his role in the Companys performance
in 2005, including overseeing progress in the Companys efforts to sell its car and
truck washes and the continuing growth of its Security Segment. The options were issued on
March 23, 2006. |
The Compensation Committee of the Board of Directors
Burton Segal
Mark Alsentzer
Constantine N. Papadakis, Ph.D.
14
Stock Performance Graph
The following line graph and table compare, for the five most recently concluded fiscal years,
the yearly percentage change in the cumulative total stockholder return, assuming
reinvestment of dividends, on the Companys common stock with the cumulative total
return of companies on the Nasdaq Stock Market and an index comprised of certain companies in
similar service industries (the Selected Peer Group Index).(1)
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG MACE SECURITY INTERNATIONAL, INC.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
ASSUMES
$100 INVESTED ON JAN. 1, 2001
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 2005
(1) |
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The Selected Peer Group Index for the current year is comprised of securities of IPIX
Corporation, Lo Jack Corp., Napco Security Systems Inc., Rockford Corporation, Taser
International Inc., and Vicon Industries Inc. The peer group index used in last years
proxy statement was comprised of LoJack Corp. and Precision Auto Care, Inc. The current peer
group includes additional security products companies to more appropriately reflect
Maces transition to, and growth in sales of security products. There can be no
assurance that the Companys stock performance will continue into the future with the
same or similar trends depicted by the graph above. The Company neither makes nor endorses
any predictions as to future stock performance. |
15
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG MACE SECURITY INTERNATIONAL, INC., THE NASDAQ
MARKET INDEX, AND SELECTED PEER GROUP
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December 31, |
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2000 |
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2001 |
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2002 |
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2003 |
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2004 |
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2005 |
Mace Security International, Inc. |
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100.0 |
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94.92 |
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115.34 |
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115.34 |
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264.90 |
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136.31 |
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Selected Peer Group |
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100.0 |
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86.50 |
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71.42 |
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126.88 |
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317.72 |
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253.96 |
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Nasdaq Market Index |
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100.0 |
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79.71 |
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55.60 |
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83.60 |
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90.63 |
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92.62 |
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Former Peer Group |
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100.0 |
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72.40 |
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66.03 |
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108.46 |
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163.23 |
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315.82 |
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The Performance Graph set forth above shall not be deemed incorporated by reference into any
filing under the Securities Act of 1933, as amended (the Securities Act) or the
Securities Exchange Act of 1934, as amended (theExchange Act) by virtue of any
general statement in such filing incorporating this Form 10-K by reference, except to the
extent that the Company specifically incorporates the information contained in this section by
reference, and shall not otherwise be deemed filed under either the Securities Act or the
Exchange Act.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
About Prior Audits
The rules and regulations of the Securities and Exchange Commission require Mace to make the
following disclosures to you:
The reports of Grant Thornton LLP on Maces consolidated financial statements for the
fiscal years ended December 31,2005, 2004, 2003, 2002, 2001 and 2000, 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 each of the last
three fiscal years, 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 Maces
consolidated financial statements for such years.
Our Audit Committee has not yet selected an accountant for the fiscal year ending December 31,
2006. It is re-evaluating the Companys needs and, accordingly, intends to evaluate
available candidates.
Audit Fees and Related Matters
Audit Fees. The Company was billed $485,083, by Grant Thornton LLP for the audit of Maces
annual financial statements for the fiscal year ended December 31, 2005, and for the review of
the financial statements included in Maces Quarterly Reports on Forms 10-Q filed during
2005. The Company was billed $184,201 by Grant Thornton LLP for the audit of Maces
annual financial statements for the fiscal year ended December 31, 2004, and for the review of
the financial statements included in Maces Quarterly Reports on Forms 10-Q filed during
2004.
Audit Related Fees. The Company did not incur any audit related fees during 2005 or 2004.
Tax Fees. The Company was billed $69,462 and $17,684 for tax compliance services rendered by
Grant Thornton LLP during 2005 and 2004, respectively.
All Other Fees. The Company did not incur any other fees during 2005 or 2004.
Other Matters. The Audit Committee of the Board of Directors has considered whether the provision
of financial information systems design and implementation services and other non-audit services is
compatible with maintaining the independence of Maces independent auditors, Grant Thornton
LLP. The Audit Committee pre-approves all auditing services and permitted non-audit services
(including the fees and terms thereof) to be performed for the Company by
16
its independent auditors.
All auditing services and permitted non-audit services in 2004 and 2005 were pre-approved. The
Audit Committee may delegate authority to the chairman, or in his or her absence, a member
designated by the chairmen to grant pre-approvals of audit and permitted non-audit services,
provided that decisions of such person or subcommittee to grant pre-approvals shall be presented to
the full Audit Committee at its next scheduled meeting.
Presence of Independent Registered Public Accountants
Representatives of Grant Thornton LLP will be 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.
Audit Committee Report
The Audit Committee of Maces Board of Directors is composed of three independent
directors, as defined by NASDAQ rules, and operates under a written charter adopted by the Board of Directors. The Audit Committee
Charter is posted on the Corporations website at www.mace.com.
Maces management is responsible for the Companys internal controls and the financial
reporting process. Grant Thornton LLP, Maces independent registered public accounting firm, is responsible for
performing an independent audit of Maces consolidated financial statements in
accordance with auditing standards generally accepted in the United States and to issue a
report thereon. The Audit Committees responsibility is to monitor and oversee these
processes and review all related party transactions. In this context, the Audit Committee has
met and held discussions with management and Grant Thornton LLP. Management has represented to
the Audit Committee that Maces consolidated financial statements were prepared in
accordance with accounting principles generally accepted in the United States, and the Audit
Committee has reviewed and discussed the consolidated financial statements with management
and Grant Thornton LLP. The Audit Committee discussed with Grant Thornton LLP matters
required to be discussed by Statement on Auditing Standards No. 61 (Communication With Audit
Committees). Grant Thornton LLP also provided to the Audit Committee the written disclosures
required by Independence Standards Board Standard No. 1 (Independence Discussions With Audit
Committee), and the Audit Committee discussed with Grant Thornton LLP that firms
independence. Based on the Audit Committees discussion with management and Grant
Thornton LLP, and the Audit Committees review of managements representation and
Grant Thornton LLPs report to the Audit Committee, the Audit Committee recommended that
the Board of Directors include the Companys audited consolidated financial statements
in Maces Annual Report on Form 10-K for the fiscal year ended December 31, 2005
The Audit Committee of the Board of Directors
Burton Segal, Chairman
Mark S. Alsentzer
Constantine N. Papadakis, Ph.D.
17
THE PRINCIPAL STOCKHOLDERS OF MACE
Beneficial Ownership
The following beneficial ownership table sets forth information as of September 30, 2006 regarding
beneficial ownership of shares of Mace common stock by the following persons:
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each person who is known to Mace to own beneficially more than 5%
of the outstanding shares of Mace common stock, based upon
Maces records or the records of the United States
Securities and Exchange Commission; |
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each director of Mace; |
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each Named Executive Officer; and |
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all directors and executive officers of Mace as a group. |
Unless otherwise indicated, to Maces 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, 2006, 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.
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Amount and |
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Nature of |
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Name and Address of |
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Percentage of |
Beneficial Owner |
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Ownership |
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Common Stock Owned (1) |
Louis D. Paolino, Jr. |
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2,380,640 |
(2) |
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14.2 |
% |
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Lawndale Capital Management, LLC
591 Redwood Highway, Suite 2345
Mill Valley, CA 94941 |
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1,024,412 |
(3) |
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6.7 |
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Ancora Capital, Inc.
One Chagrin Highlands
2000 Auburn Drive, Suite 300
Cleveland, Ohio 44122 |
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871,400 |
(4) |
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5.7 |
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Mark S. Alsentzer |
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592,500 |
(5) |
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3.9 |
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Matthew J. Paolino |
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298,354 |
(6) |
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1.9 |
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Robert M. Kramer |
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559,539 |
(7) |
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3.6 |
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Gregory M. Krzemien |
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395,250 |
(8) |
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2.5 |
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Ronald R. Pirollo |
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213,334 |
(9) |
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1.4 |
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Constantine N. Papadakis, Ph.D. |
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87,500 |
(10) |
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* |
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Burton Segal |
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40,000 |
(11) |
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* |
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All current directors and
executive officers as a group (8
persons) |
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4,567,117 |
(12) |
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25.2 |
% |
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*
(1) |
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Less than 1% of the outstanding shares of Mace common stock.
Percentage calculation is based on 15,275,382 shares outstanding on September 30, 2006. |
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(2) |
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Includes options to purchase 1,489,682 shares. |
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(3) |
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According to their Schedule 13D filed with the Securities and Exchange
Commission on July 27, 2006, consists of 1,024,412 shares to which Lawndale Capital
Management, LLC (Lawndale) has shared voting |
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and dispositive power. The Schedule
13D was filed jointly by Lawndale, Andrew Shapiro and Diamond A. Partners, L.P.
(Diamond). Lawndale is the investment advisor to and the general partner of
Diamond, which is an investment limited partnership. Mr. Shapiro is the sole manager of
Lawndale. Mr. Shapiro is also deemed to have shared voting and dispositive power with respect
to the shares reported as beneficially owned by Lawndale. Diamond has shared voting and
dispositive power with respect to 895,230 shares of the Company. |
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(4) |
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Represents shares held by participants in the Ancora Group, which includes Ancora Capital;
Ancora Securities Inc, the main subsidiary of Ancora Capital; Ancora Advisors LLC; Ancora
Trust, the master trust for the Ancora Mutual Funds; Ancora Foundation, a private foundation;
Merlin Partners, an investment limited partnership; various owners and employees of the
aforementioned entities. The Ancora Group has sole voting and investment power with respect
to 836,400 shares and shared investment power with respect to 35,000 shares. Ancora
Securities Inc is registered as a broker/dealer with the Securities and Exchange Commission
(the SEC) and the National Association of Securities Dealers. Ancora Advisors
LLC is registered as an investment advisor with the SEC under the Investment Advisors Act, as
amended. The Ancora Trust, which includes Ancora Income Fund, Ancora Equity Fund, Ancora
Special Opportunity Fund, Ancora Homeland Security Fund and Ancora Bancshares, are registered
with the SEC as investment companies under the Investment Company Act, as amended. Mr. Richard
Barone is the controlling shareholder of Ancora Capital, controls 31% of Ancora Advisors, owns
approximately 15% of Merlin Partners, and is Chairman of and has an ownership interest in the
various Ancora Funds.Ancora Advisors LLC has the power to dispose of the shares owned by the
investment clients for which it acts as advisor, including Merlin Partners, for which it is
also the General Partner, and the Ancora Mutual Funds. Ancora Advisors LLC disclaims
beneficial ownership of such shares, except to the extent of its pecuniary interest therein.
Ancora Securities Inc acts as the agent for its various clients and has neither the power to
vote nor the power to dispose of the shares. Ancora Securities Inc disclaims beneficial
ownership of such shares. All entities named herein (Ancora Group) each disclaim membership
in a Group as such term is defined in Section 13(d)(3) of the Exchange Act and the Rules and
Regulations promulgated thereunder. |
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(5) |
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Includes options to purchase 92,500 shares. Also includes 200,000 shares that have been
delivered by Mr. Alsentzer in street name to Argyll Equities, LLC (Argyll), as
collateral for a $600,000 loan obtained by Mr. Alsentzer on April 27, 2004 (Pledged
Shares). Mr. Alsentzer had advised the Company that he retained the right to vote the
Pledged Shares. By letter dated May 4, 2005, Mr. Alsentzer requested that Argyll confirm in
writing that the Pledged Shares were in Argylls possession and were being held as
collateral, under the terms of Mr. Alsentzers agreement with Argyll. To date Mr.
Alsentzer has not received the requested confirmation or any notice of default from Argyll.
Based on the information the Company has received, the Company is not able to determine
whether Mr. Alsentzer retains beneficial ownership over the Pledged Shares. . |
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(6) |
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Includes options to purchase 96,500 shares. |
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(7) |
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Includes options to purchase 480,000 shares. |
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(8) |
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Includes options to purchase 370,000 shares. |
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(9) |
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Includes options to purchase 208,337 shares. |
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(10) |
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Represents options to purchase 87,500 shares. |
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(11) |
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Represents options to purchase 40,000 shares. |
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(12) |
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See Notes 2 and 5 through 11 above. |
19
ADDITIONAL INFORMATION
Certain Relationships and Related Party Transactions
From November 2001 through July 2002, the Company prepaid LP Learjets, LLC $5,109 per month for the
right to use a Learjet 31A for 100 hours per year. LP Learjets, LLC is a company owned by Louis D.
Paolino, Jr., the Companys Chairman, Chief Executive Officer and President. When the Learjet
31A is used, the prepaid amount is reduced by the hourly usage charge as approved by the Audit
Committee, and the Company pays to third parties unaffiliated with Louis D. Paolino, Jr., the
direct costs of the Learjets per-hour use, which include fuel, pilot fees, engine insurance
and landing fees. The balance of unused prepaid flight fees totaled $31,659 at both December 31,
2005 and September 30, 2006.
During the Companys fiscal year ended December 31, 2005 and the first nine months ending
September 30, 2006, Louis D. Paolino, Jr. purchased approximately $44,500 and $40,800, respectively
of the Companys products at a discount from the prices charged to distributors. The total of
the discount given to Mr. Paolino in the Companys fiscal year ended December 31, 2005 and
the first nine months ending September 30, 2006 was approximately $18,200 and $5,200, respectively.
The Companys Security Segment leases manufacturing and office space under a five-year lease
with Vermont Mill, Inc. (Vermont Mill), which provided for monthly lease payments of
$9,167 through November 2004. Vermont Mill is controlled by Jon E. Goodrich, a former director and
current employee of the Company. The Company has exercised an option to continue the lease through
November 2009 at a rate of $10,576 per month. The Company believes that the lease rate is lower
than lease rates charged for similar properties in the Bennington, Vermont area. On July 22, 2002,
the lease was amended to provide Mace the option and right to cancel the lease with proper notice
and a payment equal to six months of the then current rent for the leased space occupied by Mace.
Rent expense under this lease was $126,900 for the fiscal year ended December 31, 2005 and $95,200
for the nine months ending September 30, 2006.
During the Companys fiscal year ended December 31, 2005 and the first nine months ending
September 30, 2006, the Companys Security Segment sold approximately $36,000 and $300,
respectively of electronic security equipment to a company of which Louis Paolino, III, the son of
the Companys CEO, Louis D. Paolino, Jr., is a partial owner. The pricing extended to this
company is no more favorable than the pricing given to third party customers who purchase in
similar volume. At September 30, 2006, outstanding invoices totaling $8,800 were owed from this
company to Mace.
On September 29, 2005, Louis Paolino III, the son of the Companys Chief Executive Officer,
Louis Paolino, Jr., purchased from the Company a warehouse bay in Hollywood, Florida that is no
longer used in the Companys operations for $306,000 in cash. The Companys Audit
Committee authorized the Company on February 14, 2005 to proceed with a sale of the warehouse
property to Louis Paolino III for $306,000. The Company paid $256,688 for the property in 2003. The
warehouse property was appraised by a third party independent appraiser on January 18, 2005 at an
estimated market value of $306,000.
Deadline For Stockholder Proposals
July 5, 2007, is the deadline for stockholders to submit proposals pursuant to Rule 14a-8 of the
Exchange Act for inclusion in Maces Proxy Statement for Maces 2007 Annual Meeting of
Stockholders, if any stockholder proposal is submitted after September 18, 2007, the Proxy holders
will be allowed to use their discretionary voting authority when the proposal is raised at the 2006
Annual Meeting without any discussion of the matter in the Proxy Statement for that meeting.
20
Maces Annual Report
A copy of Maces 2005 Annual Report to Stockholders (including its Annual Report on Form
10-K, 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-K. Direct all
requests for copies of the above materials to Gregory M. Krzemien, Chief Financial Officer, at the
offices of Mace set forth on page 1 of this proxy statement.
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By Order of the Board of Directors, |
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/s/ Robert M. Kramer |
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Robert M. Kramer
Secretary |
Mt. Laurel, New Jersey |
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October 31, 2006 |
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21
ANNUAL
MEETING OF STOCKHOLDERS OF
MACE SECURITY INTERNATIONAL, INC.
December 8, 2006
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
ê Please
detach along perforated line and mail in the envelope
provided. ê
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
ELECTION OF DIRECTORS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
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1. |
Election of Directors:
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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 and any adjournment or postponement thereof.
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NOMINEES: |
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FOR ALL NOMINEES |
¡ |
Louis D. Paolino, Jr. |
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¡ |
Mark S. Alsentzer |
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PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
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WITHHOLD AUTHORITY |
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Constantine N. Papadakis, Ph.D |
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FOR ALL NOMINEES
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Matthew J. Paolino |
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Burton Segal |
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FOR ALL EXCEPT
(See instructions below) |
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INSTRUCTION:
To withhold authority to vote for any individual nominee(s), mark
FOR ALL EXCEPT and fill in the circle next to each
nominee you wish to withhold, as shown here:
=
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To change the address on your account, please check the box
at right and indicate your new address in the address space
above. Please note that changes to the registered name(s)
on the account may not be submitted
via this method.
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Signature of Stockholder
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Date:
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Signature of Stockholder
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Date:
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Note:
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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MACE SECURITY INTERNATIONAL, INC.
1000 CRAWFORD PLACE, SUITE 400
MT. LAUREL, NEW JERSEY 08054
PROXY Annual Meeting of Stockholders December 8, 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gregory M. Krzemien and Robert M. Kramer 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 October 27, 2006,
at the Annual Meeting of Stockholders to be held on December 8, 2006, and 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 THE PROPOSAL; 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 the reverse side)