Shareholders’ Suit Is Settled, Ending Threat of Proxy Fight : Litigation: Security Environmental Systems will pay costs and cancel disputed stock awards to 3 company officers.

GARDEN GROVE —  Security Environmental Systems Inc. said Wednesday that it has settled a lawsuit by shareholders who were threatening to launch a hostile proxy fight for control of the company’s board of directors.

Stephen Grossman, president of the biomedical waste disposal firm, said the company will pay legal and other costs totaling $330,000 as part of the settlement with Dallas businessman Herbert Becker and other investors.

Becker, whose group filed the suit in Delaware Chancery Court in June, agreed to abandon the suit, drop the threatened proxy fight and support the company’s current board of directors. He considered the settlement a victory for the company’s 600 shareholders.

“I’m please we were able to bring this to a successful conclusion,” he said. “It was a difficult and expensive and drawn-out fight. For a change, shareholders will benefit from this.”

Grossman said the settlement was in the best interest of all shareholders and that the company’s management can now focus on its business opportunities.

Becker filed the suit after the company awarded about 3 million shares of stock to Grossman and two other officers: Chairman Alfred Grossman and former Treasurer Jonathan Grossman.

Stephen Grossman said the award in October, 1991, was in exchange for the officers’ decisions to personally guarantee loans borrowed by the company. Becker objected that the stock awards were excessive compensation and did not receive approval from disinterested shareholders.

The company voluntarily canceled 2 million shares in August, and the remaining 976,146 shares will be canceled under the settlement, Grossman said. The company will also adopt a formula to determine future compensation for corporate executives.

Becker will also serve as a financial consultant for the company for the next seven years. Becker said he owns 100,000 shares, or 1% of the stock. Other investors who were considering the proxy fight control about 18% of the company’s stock, he said.

“I’m not the kind of person that just goes away,” Becker said.

The settlement is subject to court approval in Delaware, where Security Environmental Systems is incorporated. On approval, an annual meeting will be scheduled within 60 days, Grossman said.

The company, based in Garden Grove, has about 100 employees. For the quarter that ended Sept. 30, the company reported a profit of $40,032 on revenue of $2.9 million.